MAN 3600 EXAM 2 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

MAN 3600 EXAM 2 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 Which of the following terms refer to the application of home-country laws to persons or conduct outside national borders? A. anti-boycott regulations B. extraterritoriality C. anti-dumping policies D. transparency - Answers extraterritoriality Which of the following terms indicates potential loss or adverse effects on company operations and profitability caused by developments in a country's political and/or legal environments. A. cross-cultural risk B. commercial risk C. country risk D. currency risk - Answers country risk Which of the following countries is NOT on the U.S. Sanction Program according to the course materials? A. Afghanistan B. North Korea C. Iran D. Zimbabwe - Answers Afghanistan A(n) ________ is an official ban on entire exports to or imports from a particular country, in order to isolate it and punish its government. A. sanction B. expropriation C. embargo D. confiscation - Answers embargo __________________ affects all industries and all firms in a country. A. Systematic country risk B. Controllable country risk C. An expropriation D. Unsystematic country risk - Answers Systematic country risk ________ is the seizure of corporate assets without compensation. A. Confiscation B. Embargo C. Expropriation D. Sanction - Answers Confiscation A ________ government seeks to control not only all economic and political matters but also the attitudes, values, and beliefs of the citizenry. A. mixed B. democratic C. totalitarian D. socialistic - Answers totalitarian Which of the following legal systems is based on legal precedents and past practices set by the nation's courts through interpretation of statutes, legislation, and past rulings? A. religious laws B. common laws C. socialist laws D. civil laws - Answers common laws A government policy that impedes trade through means other than explicit tariffs is known as a(n) ________. A. nontariff trade barrier B. maquiladora C. subsidy D. investment incentive - Answers nontariff trade barrier Protectionist policies may also lead to ________. A. price inflation B. increased choices for buyers C. easy availability of products D. high incentive to improve quality - Answers price inflation Tariffs that are ad valorem are ________. A. assessed as a percentage of the imported product's value B. based on the weight or size of the imported product C. intended to provide a steady flow of income for the government D. charged regardless of the imported product's value - Answers assessed as a percentage of the imported product's value Governments sometimes retaliate against subsidies by imposing ________, tariffs on products imported into a country to offset subsidies given to producers or exporters in the exporting country. A. countervailing duties B. local content requirements C. investment incentives D. antidumping duties - Answers countervailing duties Governments impose offensive barriers to ________. A. increase employment B. protect domestic industries C. promote national security D. safeguard the interests of special interest groups - Answers increase employment ________ are transfer payments or tax concessions made directly to foreign firms to entice them to invest in the country. A. Investment incentives B. Antidumping duties C. Countervailing duties D. Quotas - Answers Investment incentives Testing, certification, or inspection requirements are a type of _______________________. A. Quotas B. Local content regulations C. Subsidies D. Administrative barriers E. Tariff barriers - Answers Administrative barriers If the State of Georgia agreed to purchase the cars assembled by Kia Motors in Georgia, an FDI into Georgia from South Korea, it is a ______________ incentive. A. fiscal B. financial C. non-financial D. physical - Answers non-financial Members of ________ agree to adopt common tariffs and non-tariff barriers that are applied to imports from nonmember countries. A. customs unions B. free trade areas C. NAFTA (USMCA) D. EFTA - Answers customs unions If an economic integration has factor mobility, free move of product, labor, and capital, it should be ______________. [Hint: please read all answer choices before making your selection.] A. free trade agreement only B. customs union only C. common market only D. economic union only E. either common market or economic union - Answers either common market or economic union OPEC is an example of ______________ A. international cartel B. free trade area C. political union D. economic union E. common market - Answers international cartel Which of the following is currently NOT active? A. The European Union B. FTAA C. USMCA D. CAFTA - Answers FTAA A formal arrangement between two or more countries to reduce or eliminate tariffs is known as a(n) ________. A. free trade agreement B. quota arrangement C. memorandum of association D. memorandum of understanding - Answers free trade agreement Which of the following is NOT true about NAFTA, which is now USMCA? A. It has common tariffs arranged among the member countries against non-member countries. B. The member countries include Mexico, Canada, and the United States. C. It is a free trade agreement. D. There have been increased trades among member countries since it was introduced. E. All of the above are true. - Answers It has common tariffs arranged among the member countries against non-member countries. NAFTA is an example of which of the following levels of regional integration? A. free trade area B. political union C. economic union D. common market - Answers free trade area _____________ is an economic bloc in Latin America. A. MERCOSUR B. ASEAN C. TPP D. NAFTA (USMCA) E. EU - Answers MERCOSUR Chapter 6 - Answers POLITICAL AND LEGAL SYSTEMS COUNTRY RISK - Answers -Exposure to potential loss or adverse effects on a company operations and profitability caused by developments in a country's political and/or legal environment -Also known as political risk (each country has unique political and legal systems that often pose challenges for a company performance) DIMENSIONS OF COUNTRY RISK - Answers o Harmful or unstable political system o Laws and regulations unfavorable to foreign firms o Inadequate or underdeveloped legal system o Bureaucracy and red tape o Corruption and other ethical blunders o Government intervention, protectionism, and barriers to trade and investment o Mismanagement or failure of the national economy TWO TYPES OF COUNTRY RISK - Answers Systematic and Unsystematic Systematic Country Risk - Answers -affects all industries, all firms in a country. o Example: the civil war that occurred in the former Yugoslavia and several African countries in the 1990s impacted all firms Unsystematic Country Risk - Answers -affects only a subset of firms o Example: The Russian government targeted only Yukos with politically motivated persecution, despite competitors in the Russian oil industry - Conoco-Philips, Exxon Mobil, and Royal Dutch Shell. TWO SOURCES OF COUNTRY RISK - Answers -POLITICAL SYSTEM o Government o Political parties o Legislative bodies o Lobbying groups o Trade unions o Other political institutions -LEGAL SYSTEM o Laws, regulations and rules that aim to: o Ensure order in commercial activities o Resolve disputes o Protect intellectual property o Tax economic output POLITICAL SYSTEM - Answers -a set of formal institutions that constitute a government --Also Defines how legislative bodies, political parties, lobbying groups, and trade unions interact with each other --Three Major Types -- o Totalitarianism o Socialism o Democracy (These categories are not mutually exclusive) FUNCTIONS OF POLITICAL SYSTEMS - Answers -Provide protection from external threats -Ensure stability based on laws -Govern the allocation of valued resources among the members of a society -Define how society's members interact with each other TOTALITARIANISM - Answers -Government controls all economic and political matters -Either theocratic (religion based) or secular -Led by a dictator -Sustained via secret police, propaganda, regulation of free discussion and criticism -Some countries in the Middle East and Africa; Cuba, North Korea -Ex-totalitarian states tend to have much government intervention and bureaucracy SOCIALISM - Answers -Capital is vested in the state and used primarily as a means of production for use rather than for profit -Group welfare outweighs individual welfare -Government's role is to control the basic means of production, distribution, and commercial activity -Occurs as often as social democracy (e.g., Western Europe, Brazil, India) DEMOCRACY - Answers -Economic activity occurs freely, as per market forces -LIMITED GOVERNMENT - the government performs only essential functions that serve all citizens, such as national defense, maintaining law & order, foreign relations, and providing basic infrastructure -PRIVATE PROPERTY RIGHTS - the ability to own property and assets and to increase one's asset base by accumulating private wealth. Property includes land, buildings, stocks, contacts, patents. Encourages initiative, ambition, innovation. RELATIONSHIP BETWEEN ECONOMIC AND POLITICAL FREEDOM - Answers -Economic freedom flourishes when governments support the institutions necessary for that freedom, such as freely operating market and the rule of law. -Political freedom and economic freedom are closely related. o As countries develop economic ties with foreign trading partners and integrate themselves with business o This has happened, for example, with the introduction of economic reforms and open markets in India since the 90s o The exhibit (pg. 149) also reveals how countries with the highest living standards (Australia, France, Germany, japan, united states) also tend to have the most political and economic freedoms. o By contrast, countries with the lowest living standards (Libya, North Korea, Pakistan) tend to score lowest on political and economic freedoms DEMOCRACY AND OPENNESS - Answers -Democracy is associated with "openness", the lack of regulation and barriers to the entry of firms in foreign markets -The greater the openness, the fewer the constraints placed on foreign firms -Absence of excessive regulations also benefits buyers because openness increases the quantity and variety of products available o Openness is also associated with: ------Successful market entry ------Increased market demand ------Competition on quality, which improves overall product quality ------Increased competition, leading to efficiencies and lower prices · Example - since the 1980s, India steadily lowered entry barriers to its car market. Foreign carmakers entered the market, greatly increasing the number of models for sale. Greater competition increased the quality of available cars, and car prices fell POLITICAL AND ECONOMIC SYSTEMS - Answers -TOTALITARIANISM is associated with COMMAND ECONOMIES, wherein the sate makes all decisions on what to produce, how much and at what prices. -DEMOCRACY is associated with MARKET ECONOMIES, wherein the interaction of supply and demand determine the prices. Government intervention is limited, and economic decisions are left to individuals and firms. Means of production are privately owned and operated. -SOCIALISM is associated with MIXED ECONOMIES, which have features of both market and command economies. (e.g., Sweden and Singapore) TOTALITARIANISM is associated - Answers with COMMAND ECONOMIES, wherein the sate makes all decisions on what to produce, how much and at what prices. DEMOCRACY is associated - Answers with MARKET ECONOMIES, wherein the interaction of supply and demand determine the prices. Government intervention is limited, and economic decisions are left to individuals and firms. Means of production are privately owned and operated. SOCIALISM is associated - Answers with MIXED ECONOMIES, which have features of both market and command economies. (e.g., Sweden and Singapore) THE RULE OF LAW - Answers -Existence of a legal system where rules are clear, publicly disclosed, fairly enforced, and widely respected by individuals, organizations, and the government -Common in the ADVANCED ECONOMIES -International business flourishes in societies where rule of law prevails -Economic activity suffers and uncertainty increases when the rule of law is weak LEGAL SYSTEM - Answers -a system for interpreting and enforcing laws o It incorporates institutions and procedures for ensuring order and resolving disputes in commercial activities o Four major types: Common Law, Civil Law, Religious Law, Mixed Systems COMMON LAW - Answers -A legal system that originated in England and spread to Australia, Canada, USA, and other former members of the British Commonwealth (also known as case law) -The basis of law is TRADITION, past practices, and legal precedents set by courts via interpretation of statutes, legislation, and past rulings -Judges have much power to interpret laws based on the circumstances of individual cases. Thus, common law is RELATIVELY FLEXIBLE CIVIL LAW - Answers -Found in France, Germany, Italy, Japan, Turkey, and much of Latin America -Based on an all-inclusive system of laws that have been "CODIFIED" - clearly written by legislative bodies -Laws are more "cast in stone" and not strongly subject to interpretation by courts -A key difference is that COMMON LAW is mainly Judicial in origin and based on court decisions, whereas CIVIL LAW is mainly legislative and based on laws passed by national and state legislatures RELIGIOUS LAW - Answers -Strongly influenced by religious beliefs, ethical codes, and moral values, viewed as mandated by a supreme being -Most important religious legal systems are based on Hindu, Jewish, and Islamic law -Islamic law spells out norms of behavior regarding politics, economics, banking, contracts, marriage, and many other social and business issues GOVERNMENT TAKEOVER OF CORPORATE ASSETS - Answers -Governments occasionally seize the assets of corporations. The industry sectors most often targeted by government seizure are natural resources (e.g., mining and petroleum), utilities, and manufacturing. Fortunately, aggressive seizure is less common these days as governments in many developing countries have adopted institutional reforms that aims to attract FDI from abroad and foster economic growth. -Confiscation - The seizure of corporate assets without compensation -Expropriation - asset seizure with compensation -Nationalization - Takeover of an entire industry, with or without compensation Confiscation - Answers The seizure of corporate assets without compensation Expropriation - Answers asset seizure with compensation Nationalization - Answers Takeover of an entire industry, with or without compensation RELATIONSHIP BETWEEN POLITICAL SYSTEMS AND LEGAL SYSTEMS - Answers Mixed Systems Mixed Systems - Answers -Two or more legal systems operating together -The contrast between civil and common law has become blurred as countries combine both systems -TOTALITARIANISM is most associated with religious law and socialist law -DEMOCRACY is associated with common law, civil law, and mixed systems o MIXED SYSTEMS EXAMPLE - legal systems in Lebanon, Morocco, and Tunisia share elements of civil law and Islamic law ACTORS IN POLITICAL AND LEGAL SYSTEMS - Answers -The Government, or "public sector," operating at national and local levels -International Organizations such the World Bank, World Trade Organization, and the United Nations -Special Interest Groups such as labor unions and environmental advocates -Local competing firms, which oppose foreign firms from entry into the local market and may lobby their government for protection The Government (ACTORS IN POLITICAL AND LEGAL SYSTEMS) - Answers -or "public sector," operating at national and local levels o Have the power to enact and enforce laws o Strongly influence how firms enter host countries and how they conduct business there o Regulate international business activity through a complex system institutions, agencies, and public officials International Organizations (ACTORS IN POLITICAL AND LEGAL SYSTEMS) - Answers -such as the World Bank, World Trade Organization, and the United Nations o such organizations facilitate free and fair trade by providing administrative guidance, governing frameworks, and, occasionally giving financial support Special Interest Groups (ACTORS IN POLITICAL AND LEGAL SYSTEMS) - Answers -such as labor unions and environmental advocates o operate to advance the goals of a particular community (countries, industries, or causes) o engage in political activity to advance specific causes, ranging from labor rights to environmental protection. They often influence national political processes and produce outcomes with far reaching consequences for business. Local competing firms (ACTORS IN POLITICAL AND LEGAL SYSTEMS) - Answers oppose foreign firms from entry into the local market and may lobby their government for protection EMBARGOES AND SANCTIONS - Answers -Governments may respond to offensive activities of foreign countries by imposing embargoes and sanctions -SANCTIONS are bans on international trade with extra tariffs, trade barriers, import duties, and import/export quotas o Generally, arise in the context of an unresolved trade or policy dispute, such as disagreement about the fairness of some international trade practice o Much evidence suggesting that sanctions often do not achieve desired outcomes -EMBARGOES makes trade activities with specific countries illegal to isolate it and punish its government -Generally, more serious than a sanction and is used as a political punishment for some disapproved policies or acts -Example: the U.S. has enforced embargoes against Cuba, Iran, and North Korea, labeled as state sponsors of terrorism SANCTIONS - Answers -bans on international trade with extra tariffs, trade barriers, import duties, and import/export quotas o Generally, arise in the context of an unresolved trade or policy dispute, such as disagreement about the fairness of some international trade practice o Much evidence suggesting that sanctions often do not achieve desired outcomes EMBARGOES - Answers -makes trade activities with specific countries illegal to isolate it and punish its government -Generally, more serious than a sanction and is used as a political punishment for some disapproved policies or acts -Example: the U.S. has enforced embargoes against Cuba, Iran, and North Korea, labeled as state sponsors of terrorism COUNTRY RISKS AND HOST COUNTRY LEGAL SYSTEMS - Answers • Foreign investment laws • Controls on operating forms and practices • Marketing and distribution laws • Laws regarding income repatriation • Environmental laws • Contract laws • Inadequate or underdeveloped legal systems • Internet and e-commerce regulations Foreign investment laws (COUNTRY RISKS AND HOST COUNTRY LEGAL SYSTEMS) - Answers -affect the type of entry strategy firms choose as well as their operation and performance. o Examples: --Japan-- the "large-scale retail store law" restricted foreigners from opening warehouse-style stores like Toys'R'Us, in favor of smaller Japanese retailers --Mexico-- foreign oil companies cannot obtain 100% ownership of Mexican oil firms --United states-- restricts inward investments seen to affect national security. E.g., the US congress blocked Dubai Ports World, a Middle Eastern firm, which sought a deal to manage US ports Controls on operating forms and practices (COUNTRY RISKS AND HOST COUNTRY LEGAL SYSTEMS) - Answers -laws and regulations on how firms can conduct production, marketing, and distribution activities within their borders. Such restrictions can hinder company performance abroad o EXAMPLE: In the Telecommunications sector in China, the Chinese government requires foreign investors to seek joint ventures with local firms. This ensures local control of the telecom industry; and China gains access to foreign capital and technology Marketing and distribution laws (COUNTRY RISKS AND HOST COUNTRY LEGAL SYSTEMS) - Answers -regulate practices are in advertising, promotion, and distribution. o such constraints affect a firms' marketing and profitability o product safety and liability laws hold manufacturers and sellers responsible for damage, injury or death defective products cause. In the case of violations, firms and company executives are subject to legal penalties, such as fines, imprisonment, as well as civil lawsuits. o Product liability laws in developing countries are generally weak o Examples: --Finland, France, Norway, and New Zealand prohibit cigarette advertising on television --Canada and other countries cap prices in the pharmaceutical and other industries Laws on Income Repatriation (COUNTRY RISKS AND HOST COUNTRY LEGAL SYSTEMS) - Answers -limit the amount of net income or dividends that firms can bring back to the home country. o common in countries experiencing a shortage of hard currencies