Chapter 02

National Differences in Political, Economic, and Legal Systems

 

True / False Questions

 
1. The central message of collectivism is that individual economic and political freedoms are
the ground rules on which a society should be based. 
 
True    False
 
2. The communists believed that socialism could be achieved by democratic means, and turned
their backs on violent revolution and dictatorship. 
 
True    False
 
3. The Cold War was, in many respects, a war between collectivism and individualism. 
 
True    False
 
4. Most modern democratic states practice representative democracy. 
 
True    False
 
5. Democracy is a form of government that prohibits opposing political parties. 
 
True    False
 
6. In a totalitarian country, there are safeguards to protect an individual's right to freedom of
expression, opinion, and organization. 
 
True    False
 
7. The number of command economies has fallen dramatically since the demise of communism
in the late 1980s. 
 
True    False
 
8. The objective of the government in a command economy is to encourage free and fair
competition between private producers. 
 
True    False
 
9. In mixed economies, governments also tend to take into state ownership troubled firms
whose continued operation is thought to be vital to national interests. 
 
True    False
 
10. A nation's legal system is usually of very little interest to international business managers,
because international businesses are headquartered in different countries. 
 
True    False
 
11. Judges under a civil law system have more flexibility than those under a common law
system. 
 
True    False
 
12. A theocratic law system is one in which the law is based on religious teachings. 
 
True    False
 
13. The parties to an agreement normally resort to contract law when one party feels the other
has violated either the letter or the spirit of an agreement. 
 
True    False
 
14. Contracts under a civil law system tend to be very detailed with all contingencies spelled
out. 
 
True    False
 
15. Many of the world's larger trading nations, including India and the United Kingdom, have
not ratified the United Nations Convention on Contracts for the International Sale of Goods
(CISG). 
 
True    False
 
16. To facilitate international business, property rights are defined in a consistent way across
countries. 
 
True    False
 
17. Property rights can be violated in two ways—through private action and through public
action. 
 
True    False
 
18. The Foreign Corrupt Practices Act does not allow for grease payments. 
 
True    False
 
19. Patents, copyrights, and trademarks establish ownership rights over intellectual property. 
 
True    False
 
20. Patents discourage companies from committing themselves to extensive basic research. 
 
True    False
 
21. The Trade-Related Aspects of Intellectual Property Rights, attempts to reduce intellectual
property protections to enhance trade. 
 
True    False
 
22. Product liability sets certain safety standards to which a product must adhere. 
 
True    False
 
23. Product liability can be much lower if a product does not conform to required safety
standards. 
 
True    False
 
24. The political systems of a country raise ethical issues that have implications for the practice
of international business. 
 
True    False
 
 

Multiple Choice Questions

 
25. Interdependent political, economic, and legal systems of a country make up its: 
 

A. administrative agenda.

B. socioeconomic fabric.

C. cultural environment.

D. political economy.
 
26. A political system that prioritizes the needs of the society over individual freedoms is called
_____. 
 

A. totalitarianism

B. collectivism

C. capitalism

D. egalitarianism
 
27. Modern socialism has been popularized largely through the work of _____. 
 

A. Adam Smith

B. Karl Marx

C. David Hume

D. Thomas Hobbes
 
28. The _____ believed that socialism could be achieved only through violent revolution and
totalitarian dictatorship. 
 

A. existentialists

B. social democrats

C. communists

D. Anarchists – chủ nghĩa vô chính phủ

 
29. In several Western democracies, the poor performance of state-owned enterprises, because of
protection from competition and guaranteed government financial support, led to _____. 
 

A. privatization

B. nationalization

C. liberalization

D. socialization of production
 
30. Which of the following philosophies can be traced back to the ancient Greek philosopher
Aristotle? 
 

A. Socialism

B. Individualism

C. Collectivism

D. Anarchism
 
31. The tenet of _____ is that the welfare of society is best served by letting people pursue their
own economic self-interest. 
 

A. socialism

B. communism

C. anarchism

D. individualism
 
32. Which of the following statements about individualism is true? 
 

A. Individualism promotes state ownership of the basic means of production, distribution,

and exchange.

B. Individualism promotes globalization.

C. Individualism creates an anti-business environment.

D. Individualism advocates for a democratic political system.

 
33. Which of the following is a feature of a democracy? 
 

A. Exercise of absolute control by one person or political party.

B. Governance by people or elected representatives.

C. Prohibition of entry to opposing political parties.

D. Complete restriction of individual political freedom.

 
34. Totalitarianism: 
 

A. refers to a political system in which government is by the people, exercised either directly
or through elected representatives.

B. is based on a belief that citizens should be directly involved in decision making.

C. is a form of government in which one person or political party exercises absolute control
over all spheres of human life.

D. is based on the idea that the welfare of society is best served by letting people pursue their
own economic self-interests.
 
35. Peoples' right to protest on issues of accountability in public expenditure would be possible
in a _____ political set-up. 
 

A. dictatorial

B. democratic

C. totalitarian

D. fascist
 
36. _____ refers to a state where political power is monopolized by a party, group, or individual
that governs according to religious principles. 
 

A. Representative democracy

B. Theocratic totalitarianism

C. Tribal anarchism

D. Monotheistic communism
 
37. Which system of government generally permits some individual economic freedom but
restricts individual political freedom, frequently on the grounds that it would lead to the rise
of communism? 
 

A. Tribal totalitarianism

B. Right-wing totalitarianism

C. Democratic totalitarianism

D. Theocratic totalitarianism
 
38. In a pure market economy: 
 

A. all productive activities are owned by the state.

B. production is determined by the interaction of supply and demand.

C. collectivist goals are given priority over individual goals.

D. the prices at which goods are sold is determined by the government.

 
39. An economy in which the interaction of supply and demand determines the quantity in which
goods and services are produced is called a _____. 
 

A. planned economy

B. command economy

C. closed economy

D. market economy
 
40. Antitrust laws in the United States are designed to: 
 

A. restrict agricultural subsidies.

B. increase trade barriers.

C. outlaw monopolies.

D. restrict privatization.
 
41. In a(n) _____ economy the government plans the goods and services that a country produces,
the quantity in which they are produced, and the prices at which they are sold. 
 

A. market

B. command

C. open economy

D. laissez-faire
 
42. In a _____ economy, certain sectors of the economy are left to private ownership and free
market mechanisms while other sectors have significant state ownership and government
planning. 
 

A. market

B. private

C. command

D. mixed
 
43. In which of the following economies would the government be most likely to take into state
ownership troubled firms whose continued operation is thought to be vital to national
interests? 
 

A. Market economies

B. Laissez-faire economies

C. Liberal economies

D. Mixed economies
 
44. Which of the following statements about the legal systems of countries is true? 
 

A. They can affect the attractiveness of a country as an investment site or market.

B. They are not influenced by the prevailing political system of the country.

C. They are almost the same for all countries.

D. They are of little importance to international business.

 
45. One key components of a country's legal system is: 
 

A. establishing a mixed economy.

B. taking a hands-off approach to business practices.

C. defining the rights and obligations of those involved in business transactions.

D. leaving the monitoring of the way business transactions are executed to the United
Nations.
 
46. Under the _____, cases are judged with reference to three characteristics: tradition,
precedent, and custom. 
 

A. theocratic law system

B. civil law system

C. contract law system

D. common law system

 
47. A civil law system tends to be less adversarial than a common law system because the: 
 

A. judges' decisions are based on detailed legal codes.

B. judges have the freedom to interpret laws based on the situation.

C. judges' decisions are based on religious teachings.

D. judges are guided by interpretations made in prior legal cases.

 
48. A common law system is different from a civil law system because: 
 

A. a common law system is based on religious teachings, while a civil law system is based
on cultural traditions.

B. a common law system is very rigid, while a civil law system tends to be more flexible.

C. in a common law system, a judge relies on legal codes to make rulings, while in a civil
law system a judge relies on his intuition and moral reasoning to make judgments.

D. in a common law system, a judge has the power to interpret the law, while in a civil law
system a judge has the power only to apply the law.
 
49. A _____ system is based on a very detailed set of laws organized into codes. 
 

A. traditional law

B. theocratic law

C. civil law

D. common law
 
50. A theocratic law system is one in which the law is based on: 
 

A. religious teachings.

B. tradition, precedent, and custom.

C. a detailed set of laws organized into codes.

D. cultural and social norms.

 
51. Which of the following is the most widely practiced theocratic legal system in the world
today? 
 

A. Hindu law

B. Sikh law

C. Islamic law

D. Jewish law
 
52. _____ is the collective term for the legal rights relating to the use to which a resource is put
and over the use made of any income that may be derived from that resource. 
 

A. Trade rights

B. Property rights

C. Positive rights

D. Common rights
 
53. In Russia, in the chaotic period following the collapse of communism, an outdated legal
system, coupled with a weak police force and judicial system, allowed the Russian Mafia to
demand "protection money" from business owners. Any business owner who rebelled had to
face violent retribution. This violation of property rights exemplifies _____. 
 

A. private action

B. copyright violation

C. infrastructural failure

D. public liability
 
54. Violation of property rights done through legal mechanisms such as levying excessive
taxation and requiring expensive licenses or permits from property holders is called _____. 
 

A. private action

B. collective action

C. public action

D. copyright violation
 
55. Which of the following areas of international trade is regulated by the Foreign Corrupt
Practices Act? 
 

A. Making and performance of commercial contracts in international trade.

B. Preventing bribery and unethical acts in the conduct of international business.

C. Establishing a set of safety standards to which a new product must adhere.

D. Controlling the mafia activity that hinders trade in Russia, Japan, and the U.S.
 
56. Which of the following is an example of intellectual property? 
 

A. A music score

B. A lazer-tag game

C. A software business

D. A theater
 
57. A _____ grants the inventor of a new product or process exclusive rights for a defined period
of time to the manufacture, use, or sale of that invention. 
 

A. copyright

B. trademark

C. contract

D. patent
 
58. Design and names by which merchants or manufacturers designate and differentiate their
products are known as _____. 
 

A. trademarks

B. copyrights

C. patents

D. licenses
 
59. The Research and Development division of a company has recently designed a new coffee
vending machine that is likely to sell very well in the market. It is compact, user-friendly,
and provides unprecedented efficiency in terms of cost per cup. Consequently, the company
fears that its competitors would soon mimic the design of their product and to protect its
product, it is now seeking a _____. 
 

A. copyright

B. patent

C. trademark

D. Certification
 
60. Which of the following provides exclusive legal rights to authors, composers, playwrights,
artists, and publishers to publish and disperse their work as they see fit? 
 

A. Patent

B. Copyright

C. Trademark

D. License
 
61. The TRIPS agreement was designed to: 
 

A. exclude China from all intellectual property agreements.

B. oversee a much stricter enforcement of intellectual property regulations.

C. hold a firm and its officers responsible when a product causes injury, death, or damage.

D. support traded software and recorded property among developed markets.

 
62. Which of the following statements about the Trade Related Aspects of Intellectual Property
Rights (or TRIPS) agreement is true? 
 

A. It was designed to oversee the loosening of intellectual property regulations, beginning in
1995.

B. It obliged WTO members to grant and enforce patents lasting at least 20 years and
copyrights lasting 50 years.

C. It directed rich countries to comply with its rules of intellectual property protection within
five years.

D. It provided the very poorest countries amnesty from complying with its rules of
intellectual property protection.
 
63. Safety standards to which a product must adhere are set by: 
 

A. safety certifications.

B. contract laws.

C. product safety laws.

D. product liability laws.

 
64. Private action refers to: 
 

A. public officials extorting income, resources, or the property itself from property holders.

B. bribing government officials in foreign countries in an attempt to win lucrative contracts.

C. theft, piracy, blackmail, and the like by private individuals or groups.

D. violations of intellectual property rights.

 
65. Which of the following is a safeguard that representative democracies use to ensure that their
elected officials are held responsible for their actions? 
 

A. Unlimited terms for elected representatives

B. A court system that is integrated with the political system

C. An individual's right to freedom of expression, opinion, and organization

D. A political police force and armed service

 
66. The _____ establishes a uniform set of rules governing certain aspects of the making and
performance of everyday commercial contracts between sellers and buyers who have their
places of business in different nations. 
 

A. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

B. Paris Convention for the Protection of Industrial Property

C. United Nations Convention on Contracts for the International Sale of Goods (CIGS)

D. World Trade Organization (WTO)

 
67. The _____ makes it illegal for American companies to bribe a foreign government official in
order to obtain or maintain business over which that foreign official has authority, and
requires all publicly traded companies to keep detailed records that would allow determining
whether a violation of the act has occurred. 
 

A. Trade-Related Aspects of Intellectual Property Rights (TRIPS)

B. Foreign Corrupt Practices Act

C. Convention on Combating Bribery of Foreign Public Officials in International Business

Transactions

D. Organisation for Economic Co-operation and Development (OECD)

 
68. Which of the following is a reason that command economies tend to stagnate? 
 

A. Costs are tightly controlled and business are forced to be efficient rather than dynamic and
innovative.

B. The abolition of private ownership means there is no incentive for individuals to look for
better ways to serve consumer needs.

C. All economic resources are mobilized for the public good.

D. Individuals in command economy countries lack the skills to be innovative.

 
69. Which of the following is true of criminal liability laws? 
 

A. Calls for the payment of monetary damages

B. They are more extensive in Western Europe than in any other region of the world

C. Results in fines or imprisonment

D. They are less impactful if the product does not conform to the required safety standards
 
70. _____ are established through patents, copyrights, and trademarks. 
 

A. Digital signatures

B. Ownership rights over private property

C. Origination fees and tributes

D. Ownership rights over intellectual property

 
71. Systems that emphasize collectivism tend toward _____. 
 

A. totalitarianism

B. capitalism

C. democracy

D. privatization
 
72. In a(n) _____ society, the welfare of society is best served by letting people pursue their own
economic self-interest. 
 

A. individualist

B. capitalist

C. democratic

D. totalitarian
 
73. _____ argued that individual diversity and private ownership are undesirable. 
 

A. Karl Marx

B. Plato

C. John Stuart Smith

D. Aristotle
 
74. _____ generally permits some individual economic freedom but restricts individual political
freedom, frequently on the grounds that it would lead to the rise of communism. 
 

A. Communist totalitarianism

B. Theoretical totalitarianism

C. Right-wing totalitarianism

D. Tribal totalitarianism
 
75. In a _____, if demand for a product exceeds supply, prices will rise, signaling to producers to
produce more. 
 

A. mixed economy

B. market economy

C. collectivist economy

D. command economy
 
76. The abolition of _____ in a command economy means there is no incentive for individuals to
look for better ways to serve consumer needs. 
 

A. private ownership

B. public ownership

C. government-owned businesses

D. co-operatives
 
77. In common law, _____ refers to cases that have come before the courts in the past. 
 

A. custom

B. precedent

C. codification

D. tradition
 
78. Judges in a(n) _____ have the power to interpret the law so that it applies to the unique
circumstances of an individual case. 
 

A. civil law system

B. international law system

C. common law system

D. theocratic law system

 
79. The most widely practiced theocratic legal system in the world today. 
 

A. Christian

B. Hindu

C. Jewish

D. Islamic
 
80. The legal rights over the use to which a resource is put and over the use made of any income
that may be derived from that resource. 
 

A. Property rights

B. Public action

C. Intellectual rights

D. Private action
 
81. In the 1970s, the United States _____ which requires all publicly traded companies, whether
or not they are involved in international trade, to keep detailed records that would reveal
whether a violation of the act has occurred. 
 

A. adopted the Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions policy

B. passed the Foreign Corrupt Practices Act

C. joined Transparency International

D. joined the Organisation for Economic Co-operation and Development (OECD)

 
82. The _____ associated with doing business in a country are a function of that country's
political, economic, and legal systems. 
 

A. ethical considerations

B. profitability

C. simplicity and ease

D. benefits, costs, and risks

 
83. When _____ is emphasized, an individual's right to do something may be restricted on the
grounds that it runs counter to "the good of society." 
 

A. individualism

B. totalitarianism

C. collectivism

D. theocracy
 
84. Plato _____; he believed that society should be stratified into classes, with those best suited
to rule. 
 

A. equated individualism with equality

B. equated collectivism with equality

C. promoted representative democracy

D. did not equate collectivism with equality

 
85. The _____ believed that socialism could be achieved only through violent revolution and
totalitarian dictatorship. 
 

A. socialists

B. communists

C. collectivists

D. social democrats
 
86. Modern socialists trace their intellectual roots to _____, although socialist thought clearly
predates this individual. 
 

A. David Hume

B. Karl Marx

C. Adam Smith

D. John Stuart Mill

 
87. A law system that is based on a detailed set of laws organized into codes. 
 

A. Theocratic

B. Contract

C. Civil

D. Common
 
88. The term _____ stresses that the political, economic, and legal systems of a country are
interdependent. 
 

A. political economy

B. common law

C. socialism

D. collectivism
 
89. Who was the author of The Wealth of Nations in which it is stated that an individual who
intends his own gain is led by an invisible hand to promote an end that was not part of his
intention? 
 

A. David Hume

B. Adam Smith

C. Karl Marx

D. John Stuart Mill

 
90. _____ occurs when a political party that represents the interests of a particular tribe (and not
always the majority tribe) monopolizes power. 
 

A. Tribal dictatorship

B. Communist totalitarianism

C. Tribal totalitarianism

D. Privatization
 
91. The term used to describe a state in which authoritarian elements have captured some or
much of the machinery of state and use this in an attempt to deny basic political and civil
liberties. 
 

A. Authoritarian dictatorship

B. Right-wing democracies

C. Representative totalitarianism

D. Pseudo-democracies – Đảng Dân chủ giả

 
92. In response to increased demand, what is a monopolist likely to do? 
 

A. Restrict output to drive prices down.

B. Increase output to drive prices down.

C. Restrict output and let prices rise.

D. Increase output and let prices rise.

 
93. In 2008, the U.S. government took an 80 percent stake in AIG to stop that financial
institution from collapsing, the theory being that if AIG did collapse, it would have very
serious consequences for the entire financial system. What type of economy is this an
example of? 
 

A. Command

B. Mixed

C. Capitalistic

D. Market
 
94. Although many countries have stringent intellectual property regulations on their books, the
enforcement of these regulations has often been lax. This has been the case even among
many of the 185 countries that are now members of the _____, all of which have signed
international treaties designed to protect intellectual property. 
 

A. World Intellectual Property Organization

B. General Agreement on Tariffs and Trade

C. Business Software Alliance

D. Trade-Related Aspects of Intellectual Property Rights (TRIPS)