Ch 4: Economic Systems and Development C HAPTER 4 E CONOMIC S YSTEMS AND D EVELOPMENT TRUE/FALSE QUESTIONS 1. China is developing its economy based on natural resources and cheap labor while India is relying on the brainpower of its people. 2. Incentives and rewards for individual business initiatives are an important component of collectivist cultures. 3. Collectivist cultures tend to offer fewer incentives and rewards than individualist cultures. 4. Entrepreneurs are businesspeople who accept the risks and opportunities involved in creating and operating new business ventures. 5. A country’s economic system consists of the structure and processes it uses to allocate its resources and conduct its commercial activities. 6. Similar to how national cultures are neither completely individualistic or completely collectivist, no economic system reflects a completely individual or group orientation. 7. In a centrally planned economy, entrepreneurs own a nation’s land, factories and other economic resources in a strategic fashion. 8. In a centrally planned economy, the government makes nearly all economy-related decisions including who produces what and the prices of products, labor, and capital. 9. Central planning is rooted in the ideology that the welfare of the group is more important than individual well-being. 10. German philosopher Helmut Newton popularized the idea of central planning in the nineteenth century. 11. Nearly all economic-related decisions in a centrally planned economy are determined by the interplay of supply and demand. 12. In a market economy, the majority of a nation’s land, factories, and other economic resources are government owned. 13. The price mechanism dictates supply and demand in a market economy. 14. Market economics is rooted in the belief that group concerns should be placed above individual well-being. 15. Canada and the United States are examples of contemporary market economies. 16. One key feature of a market economy is price flexibility, which allows most prices to rise and fall to reflect the forces of supply and demand.
Ch 4: Economic Systems and Development 17. Free choice in a market economy gives individuals access to alternative purchase options. 18. Free enterprise in a market economy gives companies the ability to decide which goods and services to produce and the markets in which to compete. 19. A monopoly occurs when one company is able to control a product’s supply and, therefore, its price. 20. Technological dualism occurs when a country uses the latest technologies in its economy but exports outdated technologies to developing countries. 21. Managers in the poorest transitional countries tend to lack training in all areas of business management. 22. Transition replaces a people’s dependence on government with greater reliance on social welfare and unemployment benefits.
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- Spring '16
- Economic system, Planned economy, centrally planned economies, centrally planned economy, Economic Systems and Development