Topic 4: National Economic Development

What does Gross Domestic Product (GDP) measure?

• The total value of exports and imports of a country

• The total value of all goods and services produced within a country in a year

• The total profits of multinational companies operating in a country

• The government spending and taxation of a country

Which of the following best defines economic transition?

• The shift from a capitalist economy to a communist economy

• The process of moving from a centrally planned economy to a market-based economy

• The adoption of foreign investment policies in a developing economy

• The increase in government control over economic activities

Which of the following is NOT considered an obstacle to economic transition?

• Shortage of capital

• Cultural changes

• High levels of technological advancement

• Managerial expertise

What is purchasing power parity (PPP) used for?

• To compare different countries’ currency values based on exchange rates

• To determine the level of poverty in a nation

• To adjust GDP for differences in cost of living across countries

• To measure the political risk in a country

Which of the following is an example of political risk?

• Changes in a country’s tax laws

• Natural disasters affecting businesses

• Confiscation of a foreign company’s assets without compensation

• Increase in global oil prices

Which of the following is a method for managing political risk?

• Avoiding expansion into developing countries

• Relying only on domestic suppliers

• Using adaptation strategies such as partnerships and localization

• Increasing product prices to offset risk

Which term refers to the forced transfer of assets from a company to the government without compensation?

• Nationalization

• Expropriation

• Confiscation

• Privatization

Which of the following is a characteristic of emerging markets such as China and Russia?

• High levels of economic stability

• Strong legal frameworks with minimal corruption

• Transition from state-controlled economies to market-based economies

• Limited foreign investment opportunities

What is the role of the United Nations (UN) in economic development?

• Controlling global currency exchange rates

• Providing leadership in fostering peace and stability worldwide

• Regulating trade agreements between developed countries

• Implementing economic policies for member countries

Which of the following is a reason for nationalizing an industry?

• To increase privatization and foreign investment

• To allow free-market competition

• To protect an industry for ideological reasons or save local jobs

• To reduce government control over economic activities