MGMT 425 COMPREHENSIVE EXAM 2026 QUESTIONS
AND ANSWERS RATED A+
✔✔________ is the process by which a nation changes its fundamental economic
organization and creates new free-market institutions.
A) Central planning
B) Economic transition
C) Industrialization
D) Economic liberalism - ✔✔B) Economic transition
✔✔Which of the following is a major obstacle to economic transition?
A) lack of government support
B) environmental degradation
C) privatization
D) black markets - ✔✔B) environmental degradation
✔✔Economic transition is the process of moving from ________.
A) developed to developing economies
B) centrally planned to free-market economies
C) developed to emerging economies
D) free-market to centrally planned economies - ✔✔B) centrally planned to free-market
economies
✔✔ China relies on its cheap labor for economic development and India on the
brainpower of its people. - ✔✔True
✔✔Incentives and rewards for individual business initiatives are an important aspect of
collectivist cultures. - ✔✔False
✔✔Individualist cultures tend to offer fewer incentives and rewards than collectivist
cultures. - ✔✔False
✔✔Entrepreneurs are businesspeople who accept the risks and opportunities involved
in operating new business ventures. - ✔✔True
✔✔No nation has a completely individualist or completely collectivist cultural orientation.
- ✔✔True
✔✔Central planning is rooted in the ideology that the welfare of a group is more
important than individual well-being - ✔✔True
✔✔Frederick Taylor popularized the idea of central economic planning in the nineteenth
century. - ✔✔False
, ✔✔The ultimate goal of a market economy is to ensure that the government takes
complete control over the distribution of a nation's resources. - ✔✔False
✔✔The government makes nearly all economy-related decisions in a market economy.
- ✔✔False
✔✔One of the reasons for the decline of central planning was its failure to create
economic value for customers. - ✔✔True
✔✔Central planning led to little economic growth and consistently low standards of
living. - ✔✔True
✔✔A centrally planned economy gives individuals access to alternative purchase
options. - ✔✔False
✔✔An economic system based on public ownership fosters growth much better than an
economy based on private ownership. - ✔✔False
✔✔The Chinese term "guanxi" means government ownership. - ✔✔False
✔✔In a mixed economy, the government tends to control the economic sectors that are
important for national security - ✔✔True
✔✔When the assets of a country are owned by the government, there seems to be
more incentive to eliminate waste. - ✔✔False
✔✔As supply and demand change for a good or service, so does its selling price. -
✔✔True
✔✔Interfering with the price mechanism is a violation of a fundamental principle of the
market economy. - ✔✔True
✔✔Both GDP and GNP measure a nation's income per person. - ✔✔False
✔✔Volunteer work and unpaid household work are included in GNP. - ✔✔False
✔✔Barter is an alternative for buyers who lack money needed to pay for imports. -
✔✔True
✔✔The concept of purchasing power parity (PPP) must be applied to understand the
true value of a currency in its home country. - ✔✔False
AND ANSWERS RATED A+
✔✔________ is the process by which a nation changes its fundamental economic
organization and creates new free-market institutions.
A) Central planning
B) Economic transition
C) Industrialization
D) Economic liberalism - ✔✔B) Economic transition
✔✔Which of the following is a major obstacle to economic transition?
A) lack of government support
B) environmental degradation
C) privatization
D) black markets - ✔✔B) environmental degradation
✔✔Economic transition is the process of moving from ________.
A) developed to developing economies
B) centrally planned to free-market economies
C) developed to emerging economies
D) free-market to centrally planned economies - ✔✔B) centrally planned to free-market
economies
✔✔ China relies on its cheap labor for economic development and India on the
brainpower of its people. - ✔✔True
✔✔Incentives and rewards for individual business initiatives are an important aspect of
collectivist cultures. - ✔✔False
✔✔Individualist cultures tend to offer fewer incentives and rewards than collectivist
cultures. - ✔✔False
✔✔Entrepreneurs are businesspeople who accept the risks and opportunities involved
in operating new business ventures. - ✔✔True
✔✔No nation has a completely individualist or completely collectivist cultural orientation.
- ✔✔True
✔✔Central planning is rooted in the ideology that the welfare of a group is more
important than individual well-being - ✔✔True
✔✔Frederick Taylor popularized the idea of central economic planning in the nineteenth
century. - ✔✔False
, ✔✔The ultimate goal of a market economy is to ensure that the government takes
complete control over the distribution of a nation's resources. - ✔✔False
✔✔The government makes nearly all economy-related decisions in a market economy.
- ✔✔False
✔✔One of the reasons for the decline of central planning was its failure to create
economic value for customers. - ✔✔True
✔✔Central planning led to little economic growth and consistently low standards of
living. - ✔✔True
✔✔A centrally planned economy gives individuals access to alternative purchase
options. - ✔✔False
✔✔An economic system based on public ownership fosters growth much better than an
economy based on private ownership. - ✔✔False
✔✔The Chinese term "guanxi" means government ownership. - ✔✔False
✔✔In a mixed economy, the government tends to control the economic sectors that are
important for national security - ✔✔True
✔✔When the assets of a country are owned by the government, there seems to be
more incentive to eliminate waste. - ✔✔False
✔✔As supply and demand change for a good or service, so does its selling price. -
✔✔True
✔✔Interfering with the price mechanism is a violation of a fundamental principle of the
market economy. - ✔✔True
✔✔Both GDP and GNP measure a nation's income per person. - ✔✔False
✔✔Volunteer work and unpaid household work are included in GNP. - ✔✔False
✔✔Barter is an alternative for buyers who lack money needed to pay for imports. -
✔✔True
✔✔The concept of purchasing power parity (PPP) must be applied to understand the
true value of a currency in its home country. - ✔✔False
