Test Bank + Answer Key

Test Bank for Global Business 5th Edition by Mike W. Peng

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Book Title: Global Business

Edition: 5th Edition

Author: Mike W. Peng

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Chapter 02 - Understanding Formal Institutions: Politics, Laws, and Economics
1. Institutional framework pertains only to a firm’s behavior.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

2. An institutional framework is made up of formal and informal institutions governing individual and firm behavior.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

3. The laws of a country are part of the formal institution.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
Copyright Cengage Learning. Powered by Cognero. Page 1
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

4. The regulatory pillar supports both informal and formal institutions.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

5. The normative pillar supports informal institutions.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

6. The values and beliefs of a culture are examples of a formal institution.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
Copyright Cengage Learning. Powered by Cognero. Page 2
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

7. The cognitive pillar is the coercive power of governments.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

8. Force majeure is a method of interpreting a statute by understanding the legislative history leading up to the adoption
of that statute.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: What Do Institutions Do?
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

9. Disabling formal institutions does not affect transaction costs.

a. True
b. False
ANSWER: False
POINTS: 1
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DIFFICULTY: Difficulty: Easy
REFERENCES: What Do Institutions Do?
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

10. Opportunism is a source of transaction costs.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: What Do Institutions Do?
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Understand
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

11. Transition economies have static institutions.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: What Do Institutions Do?
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Understand
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

12. According to the institution-based view, managers and firms make choices outside institutional constraints.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 4
 b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-02 - LO: 02-02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

13. Proposition 1 of the institution-based view specifically concerns bounded rationality.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-02 - LO: 02-02
NATIONAL STANDARDS: United States - BUSPROG: Diversity
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

14. Economic systems are examples of formal institutions.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-02 - LO: 02-02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM

Copyright Cengage Learning. Powered by Cognero. Page 5

DATE MODIFIED: 3/7/2022 4:28 PM

15. Right-wing totalitarianism refers to the monopolization of power in the hands of a communist party.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

16. Theocratic totalitarianism refers to the monopolization of political power in the hands of one religious party.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

17. Totalitarian countries have less political risk than democratic ones.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
Copyright Cengage Learning. Powered by Cognero. Page 6
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

18. Firms operating in democracies never confront political risk.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

19. Civil law uses comprehensive statutes and codes as a primary means to form legal judgments.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

20. The common law tradition is mostly spread in non-English speaking countries.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
Copyright Cengage Learning. Powered by Cognero. Page 7
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

21. Civil law has more flexibility than common law.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

22. Islamic law is the only surviving example of a theocratic legal system that is formally practiced by some existing
governments.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

23. In the United States, only 1% of the land is formally registered.

a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 8
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Operations Management
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

24. Patents are exclusive rights of firms to use specific names and brands.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

25. Trademarks are legal rights awarded by government authorities to inventors of new products or processes.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

26. Intellectual property rights need to be asserted through a formal system to both provide incentive for innovation and to
Copyright Cengage Learning. Powered by Cognero. Page 9
punish violators.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

27. Intellectual property rights are enforced though the informal institution system.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Understand
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

28. A copyright is an example of an intellectual property.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Creation of Value
KEYWORDS: Bloom's: Apply
Copyright Cengage Learning. Powered by Cognero. Page 10
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

29. In a pure market economy, the government only performs functions that the private sector cannot do.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

30. In a command economy, all factors of production are government-owned or state-owned.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

31. A mixed economy has elements of both a market economy and a command economy.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
Copyright Cengage Learning. Powered by Cognero. Page 11
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

32. All Western countries practice the absolute laissez-faire philosophy in trade.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

33. In private ownership, liquidation of a firm is forced by competition.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Debates and Extensions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

34. The cultural school of thought in economic development suggests that rich countries tend to be endowed with natural
resources.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
Copyright Cengage Learning. Powered by Cognero. Page 12
REFERENCES: Debates and Extensions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

35. The Washington Consensus emphasizes using government intervention over state ownership in business.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: True / False
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

36. The main supportive pillars of the informal institutions are _____.
a. normative and cognitive
b. regulatory and normative
c. regulatory, normative, and cognitive
d. cognitive and regulatory
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

37. In which of the following ways do formal institutions regulate trade?

Copyright Cengage Learning. Powered by Cognero. Page 13
 a. By inducing uncodified ethical beliefs into society
b. By putting faith in individuals to expose perceived wrong doings
c. By allowing the cultural beliefs of a society to dictate the terms of trade
d. By imposing laws that make certain trades unacceptable
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Understand
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

38. What type of institution is represented by laws, regulations, and rules?

a. Normative
b. Sociocultural
c. Cognitive
d. Formal
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

39. Which pillar refers to the coercive power of governments?

a. Normative
b. Regulatory
c. Cognitive
d. Informal
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions

Copyright Cengage Learning. Powered by Cognero. Page 14

QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

40. Which of the following would be considered an example of informal institutions?

a. Laws
b. Regulations
c. Ethics
d. Rules
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

41. Which of the following would be considered an example of formal institutions?

a. Laws
b. Norms
c. Cultures
d. Ethics
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

Copyright Cengage Learning. Powered by Cognero. Page 15

42. Which pillar refers to the internalized, taken for granted values and beliefs that guide individual and firm behavior?
a. Normative
b. Regulatory
c. Cognitive
d. Formal
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

43. In which of the following examples can the role of the cognitive pillar be identified?
a. A firm being exposed after one of its employees turned whistleblower
b. A firm being punished for corporate espionage by the courts
c. A firm not being able to sell a certain product in a country due to the prevalent cultural beliefs
d. A firm outsourcing its jobs
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

44. The key role of institutions is to do what in business transactions?

a. Reduce uncertainty
b. Increase normative limits
c. Increase opportunism
d. Reduce resource costs
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: What Do Institutions Do?
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QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

45. What long-standing legal doctrine excuses firms from living up to the terms of a deal in the event of natural disasters
or other calamities?
a. De minimis
b. Nolo contendere
c. Force majeure
d. Travaux préparatoires
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: What Do Institutions Do?
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

46. Which of the following would be an example of a force majeure defense for a seller?
a. If the seller decides to stop delivery out of fear of nonpayment
b. If the customer has already accepted nonconforming goods
c. If the goods to be delivered are destroyed in an earthquake
d. If the seller places warranties on the goods
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: What Do Institutions Do?
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-01 - LO: 02-01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM
Copyright Cengage Learning. Powered by Cognero. Page 17
47. Which view focuses on the dynamic interactions between the laws, cultures and ethics of a country and a firm, and
considers firm behaviors as the outcome of such an interaction?
a. Internal strength-based
b. Competency-based
c. Institution-based
d. Resource-based
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-02 - LO: 02-02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

48. Which of the following is a proposition of the institution-based view?

a. Decisions based on bounded rationality should be avoided.
b. Dependency on informal constraints will always increase the political risks associated with a firm.
c. When formal constraints are unclear, informal constraints will play a larger role in reducing uncertainty and
providing constancy to managers and firms.
d. Informal constraints always increases transaction costs for the firm.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-02 - LO: 02-02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

49. A fundamental aspect of what political system is that it effectively conducts global business by providing an
individual the right to freedom of expression and organization?
a. Communist totalitarianism
b. Right-wing totalitarianism
c. Democracy
d. Theocracy

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ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

50. Which of the following is a feature of right-wing totalitarianism?

a. It does not curtail an individual’s right to freedom of expression and organization.
b. It concentrates power in the hands of one or more religious groups.
c. It bases its economic policies on communist ideologies.
d. It does not allow room for political freedom.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-03 - LO: 02-03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

51. Which of the following is true of the civil law system?

a. It is the most widely distributed legal system around the world.
b. It originated in England, and was then spread as the legal system for all its former colonies.
c. It is shaped by precedents and traditions from previous judicial decisions.
d. It allows judges to interpret the law before making judicial decisions.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic

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STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

52. Which of the following is true of the common law system?

a. It is the oldest legal system in the world.
b. It has spread to many English-speaking countries and their (former) colonies.
c. It bases its legal judgment primarily on the dominant religion of the country.
d. It does not allow interpretations of the law by judges.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

53. What type of law refers to a legal system based on religious teachings?
a. Common law
b. Theocratic law
c. Civil law
d. Right-wing totalitarian law
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-04 - LO: 02-04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

54. Intellectual property specifically refers to which type of property?

a. Tangible
b. Intangible
c. Real
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 d. Moveable
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

55. Which of the following is an example of an intellectual property?

a. Home
b. Scientist’s laboratory
c. Office
d. Website
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

56. Legal rights awarded by government authorities to inventors of new products are _____.
a. copyrights
b. patents
c. trade secrets
d. trademarks
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05

Copyright Cengage Learning. Powered by Cognero. Page 21

NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Understand
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

57. Exclusive legal rights of authors and publishers to publish and disseminate their work are _____.
a. patents
b. trademarks
c. copyrights
d. trade secrets
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

58. Exclusive legal rights of firms to use specific names, brands, and designs to differentiate their products from others are
_____.
a. patents
b. trademarks
c. copyrights
d. trade secrets
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

59. An example of intellectual property rights is rights associated with ownership of _____.
a. vehicles
Copyright Cengage Learning. Powered by Cognero. Page 22
 b. trademarks
c. buildings
d. business contracts
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Creation of Value
KEYWORDS: Bloom's: Apply
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

60. Intellectual property rights need to be enforced through a formal system in order to _____.
a. create IP rights that adhered to the norms of individual countries
b. force firms to enforce IP rights through an informal system
c. make sure that firms follow theocratic laws
d. encourage firms to innovate while strictly adhering to IPR guidelines
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Legal Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-05 - LO: 02-05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Strategy
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

61. Which of the following economies would be characterized as having a laissez faire policy?
a. Pure market economy
b. Mixed economy
c. Command economy
d. Socialist economy
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: Multiple Choice

Copyright Cengage Learning. Powered by Cognero. Page 23

HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

62. Which of the following is true of a pure market economy?

a. All factors of production are owned by the government.
b. All factors of production are privately owned.
c. It has elements of both a market economy and a command economy.
d. Its policies are based on religious decree.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

63. Which of the following is true of a command economy?

a. All factors of production are privately owned.
b. The government only performs those functions that the private sector cannot perform.
c. It does not allow private entrepreneurship.
d. It strictly follows the doctrine of laissez faire.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Environmental Influence
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

64. For which of the following types of economies would the factors of production depend on the relative distribution of
Copyright Cengage Learning. Powered by Cognero. Page 24
market forces versus command forces?
a. Mixed economy
b. Pure market economy
c. Strict laissez faire economy
d. Command economy
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Economic Systems
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-06 - LO: 02-06
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Ethical Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

65. Which of the following is the argument used by proponents of the “cultural” explanation for the difference in
economic development across the globe?
a. Rich countries have a smarter and harder-working population
b. Rich countries tend to be endowed with natural resources
c. Rich countries tend to have better market-supporting institutions
d. Rich countries generally tend to have a democratic style of government
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Ethical Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

66. Which of the following is true of private ownership?

a. It tends to force firms into liquidation due to high competition.
b. It empowers the government to determine firm entry.
c. It allows financing only through nationalized banks.
d. Its primary objective is protecting jobs and minimizing social unrest.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
Copyright Cengage Learning. Powered by Cognero. Page 25
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

67. State ownership differs from private ownership in that in state ownership _____.
a. maximizing profits is the sole objective of a firm
b. management appointments are made by owners and investors based on merit
c. protecting jobs and minimizing social unrest is the objective of a firm
d. managers’ compensation is determined by competitive market forces
ANSWER: c
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

68. Private ownership differs from state ownership in that in private ownership _____.
a. maximizing profits is the primary objective of a firm
b. protecting jobs and minimizing social unrest is the primary objective of a firm
c. establishing a firm is determined by government officials and bureaucrats
d. failing firms deemed too big to fail may be supported by taxpayer money indefinitely
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM

Copyright Cengage Learning. Powered by Cognero. Page 26

DATE MODIFIED: 3/7/2022 4:28 PM

69. Which of the following is true of private ownership?

a. Firms are established by entrepreneurs, owners, and investors.
b. Management appointments are made by government officials and bureaucrats who may also use non-
economic criteria.
c. Firm’s objective would be to find a “fair” deal for all stakeholders.
d. Firms deemed “too big to fail” may be supported by taxpayer dollars indefinitely.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

70. Which of the following is true of the Washington Consensus?

a. It provided measures that governments can take in order to move toward a command economy.
b. It listed the bail-out procedures that governments could follow in case of a firm’s bankruptcy.
c. It advocated more governmental control in trade.
d. It advocated the superiority of private ownership over state ownership.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Debates and Extensions
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: GLOB.PENG.05.02-07 - LO: 02-07
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Legal Responsibilities
KEYWORDS: Bloom's: Remember
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

71. Identify the basic characteristics of formal and informal institutions.

ANSWER: An institutional framework is made up of formal and informal institutions governing individual and
firm behavior. Formal institutions include laws, regulations, and rules. Their primary supportive
pillar, the regulatory pillar, is the coercive power of governments. Informal institutions include norms,
cultures, and ethics. The two main supportive pillars are normative and cognitive. The normative
pillar refers to how the values, beliefs, and actions of other relevant players—collectively known as
norms—influence the behavior of focal individuals and firms. The cognitive pillar refers to the
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 internalized, taken-for-granted values and beliefs that guide individual and firm behavior.
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Understanding Institutions
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-01 - LO: 02-01
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Legal Responsibilities
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

72. What are the two core propositions of the institution-based view?
ANSWER: The first core proposition of the institution-based view is that managers and firms rationally pursue
their interests and make choices within the formal and informal constraints in a given institutional
framework. The second proposition is that while formal and informal institutions combine to govern
firm behavior, in situations where formal constraints are unclear or fail, informal constraints will play
a larger role in reducing uncertainty and providing constancy to managers and firms.
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: An Institution-Based View of Global Business
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-02 - LO: 02-02
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Strategy
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

73. Outline the differences between democracy and totalitarianism.

ANSWER: Democracy is a political system in which citizens elect representatives to govern the country on their
behalf. A fundamental aspect of democracy that is relevant to the effective conduct of global business
is an individual's right to freedom of expression and organization.
Totalitarianism is a political system in which one person or party exercises absolute political control
over the population. A totalitarian regime can also be known as a dictatorship.
POINTS: 1
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DIFFICULTY: Difficulty: Moderate
REFERENCES: Political Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-03 - LO: 02-03
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Legal Responsibilities
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

74. What is totalitarianism? Outline the four major types of totalitarian systems.
ANSWER: The opposite end of democracy is totalitarianism (also known as dictatorship), which is defined as a
political system in which one person or party exercises absolute political control over the population.
Communist totalitarianism centers on a communist party. This system had been embraced throughout
Central and Eastern Europe and the former Soviet Union until the late 1980s. It is still practiced in
China, Cuba, Laos, North Korea, and Vietnam.
Right-wing totalitarianism is characterized by its intense hatred of communism. One party, typically
backed by the military, restricts political freedom, arguing that such freedom would lead to
communism. In the postwar decades, Argentina, Brazil, Chile, Indonesia, South Africa, South Korea,
and Taiwan practiced right-wing totalitarianism. Most of these countries have recently become
democratic.
Theocratic totalitarianism refers to the monopolization of political power in the hands of one religious
party or group. Iran and Saudi Arabia are leading examples.
Tribal totalitarianism refers to one tribe or ethnic group monopolizing political power and oppressing
other tribes or ethnic groups
POINTS: 1
DIFFICULTY: Difficulty: Easy
REFERENCES: Political Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-03 - LO: 02-03
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Legal Responsibilities
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

Copyright Cengage Learning. Powered by Cognero. Page 29

75. Define political risk. How is it related to nationalization?
ANSWER: Political risk is risk associated with political changes that may negatively influence domestic and
foreign firms. The most extreme political risk may lead to nationalization (expropriation) of foreign
assets. This happened in many totalitarian countries from the 1950s through the 1970s. It has not
become a thing of the past. Recently, Argentina expropriated the assets of YPF—the subsidiary of
Spanish oil firm Repsol. Zimbabwe demanded that foreign mining companies cede 51% of their
equity without compensation. It is hardly surprising that leaders of foreign firms are sick and tired of
such expropriation and would rather go to “greener pastures” elsewhere.
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Political Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-03 - LO: 02-03
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Legal Responsibilities
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

76. Compare and contrast civil law, common law, and theocratic law.
ANSWER: Civil law was derived from Roman law and strengthened by Napoleon’s France. It is “the oldest, the
most influential, and the most widely distributed around the world.” It uses comprehensive statutes
and codes as a primary means to form legal judgments. More than 80 countries practice civil law.
Common law, which is English in origin, is shaped by precedents and traditions from previous
judicial decisions. Common law has spread to more than 40 English-speaking countries and their
(former) colonies.
Relative to civil law, common law has more flexibility, because judges have to resolve specific
disputes based on their interpretation of the law, and such interpretation may give new meaning to the
law, which will shape future cases. Civil law has less flexibility, because judges only have the power
to apply the law. On the other hand, civil law is less confrontational, because comprehensive statutes
and codes serve to guide judges. Common law is more confrontational, because plaintiffs and
defendants, through their lawyers, must argue and help judges to favorably interpret the law, largely
based on precedents.
The third legal family is theocratic law, a legal system based on religious teachings. Examples include
Jewish law and Islamic law. Although Jewish law is followed by some elements of the Israeli
population, it is not formally embraced by the Israeli government. Islamic law is the only surviving
example of a theocratic legal system that is formally practiced by some governments, such as those in
Iran and Saudi Arabia. The holy book of Islam advises against certain business practices, such as a
ban on direct face-to-face contact between unrelated men and women in public.
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Legal Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
Copyright Cengage Learning. Powered by Cognero. Page 30
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-04 - LO: 02-04
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Legal Responsibilities
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

77. How does an institution-based view understand intellectual property rights violation?
ANSWER: Overall, an institution-based view suggests that the key to understanding IPR violation is to realize
that IP violators are not amoral monsters, but ordinary people and firms. Given an institutional
environment of weak IPR protection, violators have made a rational decision by investing in skills and
knowledge in this business. No high-school graduate will say, “My dream career is counterfeiting.”
Nevertheless, thousands of individuals and firms voluntarily choose to be involved in this business
worldwide. Stronger IPR protection—not only heavier punishment, but also better education and
more lucrative legitimate job opportunities—may reduce their incentive to do so. During their earlier
stages of development, many of today’s developed countries did not respect IPR, especially IPR held
by foreign firms. Over time, as their economies became more innovation driven, they became more
respectful of IPR—it was rational to do so. Therefore, to the same extent that developed economies
voluntarily enhanced IPR protection when their economies became sufficiently innovation driven,
there is hope that emerging economies will similarly improve their IPR protection going forward.
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Legal Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-05 - LO: 02-05
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Strategy
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

78. Describe the differences among the three economic systems.

ANSWER: A pure market economy is characterized by the "invisible hand" of market forces noted by Adam
Smith in The Wealth of Nations in 1776. The government takes a hands-off approach known as laissez
faire. The government should only perform functions the private sector cannot perform.
A pure command economy is defined by a government taking, in the words of Lenin, the
"commanding height" in the economy. All factors of production should be government-owned or
state-owned, and all supply, demand, and pricing are planned by the government.
Copyright Cengage Learning. Powered by Cognero. Page 31
 A mixed economy has elements of both a market economy and a command economy. It boils down to
the relative distribution of market forces versus command forces.
POINTS: 1
DIFFICULTY: Difficulty: Moderate
REFERENCES: Economic Systems
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY Basic
MODE:
LEARNING OBJE GLOB.PENG.05.02-06 - LO: 02-06
CTIVES:
NATIONAL STANDUnited States - BUSPROG: Analytic
ARDS:
STATE STANDAR United States - AK - DISC: Strategy
DS:
KEYWORDS: Bloom's: Analyze
DATE CREATED: 11/12/2021 2:55 PM
DATE MODIFIED: 3/7/2022 4:28 PM

Copyright Cengage Learning. Powered by Cognero. Page 32