Political Environment in International Business

Which of the following best defines political risk in international business?

• The potential loss in value due to adverse changes in government policies.

• The risk of currency fluctuations.

• The threat of foreign competition.

• Changes in consumer preferences.

What is the primary role of government in a market economy?

• To control all business activities.

• To regulate the economy and ensure fair competition.

• To establish monopolies.

• To set all prices in the market.

Which of the following can cause political instability in a country?

• Stable government policies.

• Free trade agreements.

• Frequent changes in leadership.

• Economic growth.

What type of government system tends to have the least political risk for international businesses?

• Autocracy

• Democracy

• Totalitarianism

• Oligarchy

Which political ideology supports government control over key industries?

• Capitalism

• Socialism

• Communism

• Anarchism

A sudden and unexpected government change that negatively impacts a foreign investor is known as:

• Political leverage

• Political intervention

• Political instability

• Expropriation

Which of the following is an example of a political factor that affects international business?

• Cultural differences

• Taxation policies

• Consumer behavior

• Technological advancements

Which of the following is an international organization that provides political risk insurance to foreign investors?

• World Trade Organization (WTO)

• International Monetary Fund (IMF)

• Multilateral Investment Guarantee Agency (MIGA)

• United Nations (UN)

What is the term for a government takeover of a privately-owned business without fair compensation?

• Privatization

• Expropriation

• Nationalization

• Repatriation

What is a tariff?

• A tax on foreign-made goods imported into a country.

• A tax on goods produced domestically.

• A government subsidy for exporters.

• A form of political corruption.