Test Bank for Global Business 3rd Edition by Mike Peng

Test Bank for Global Business 3rd Edition by Mike Peng Chapter 2—Understanding Formal Institutions: Politics, Laws, and Economics TRUE/FALSE 1. Institutional framework only pertains to a firm’s behavior. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 2. An institutional framework is made up of formal and informal institutions governing individual and firm behavior. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 3. The laws of a country are part of the formal institution. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 4. The regulatory pillar supports both informal and formal institutions. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 5. The normative pillar supports informal institutions. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 6. The values and beliefs of a culture are examples of a formal institution. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 35 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 7. Cognitive pillar is the coercive power of governments. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 36 OBJ: LO: 2-1 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 8. Force majeure is a method of interpreting a statute by understanding the legislative history leading up to the adoption of that statute. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 36 OBJ: LO: 2-2 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 9. Disabling formal institutes does not affect transaction costs. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 37 OBJ: LO: 2-2 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 10. Opportunism increases transaction costs. ANS: T PTS: 1 DIF: Difficulty: Moderate REF: p. 38 OBJ: LO: 2-2 NAT: BUSPROG: Analytic KEY: Bloom's: Comprehension 11. Transitional economies have static institutions. ANS: F PTS: 1 DIF: Difficulty: Moderate REF: p. 38 OBJ: LO: 2-2 NAT: BUSPROG: Analytic KEY: Bloom's: Comprehension 12. According to the institution-based view, managers and firms make choices outside institutional constraints. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 39 OBJ: LO: 2-3 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 13. Proposition 1 of the institution-based view specifically concerns bounded rationality. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 39 OBJ: LO: 2-3 NAT: BUSPROG: Diversity KEY: Bloom's: Knowledge 14. Economic systems are examples of formal institutions. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 40 OBJ: LO: 2-3 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 15. Right-wing totalitarianism refers to the monopolization of power in the hands of a communist party. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 41 OBJ: LO: 2-4 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 16. Theocratic totalitarianism refers to the monopolization of political power in the hands of one religious party. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 41 OBJ: LO: 2-4 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 17. Totalitarian countries have less political risk than democratic ones. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 41 OBJ: LO: 2-4 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 18. Firms operating in democracies never confront political risk. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 41 OBJ: LO: 2-4 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 19. Civil law uses comprehensive statutes and codes as a primary means to form legal judgments. ANS: T PTS: 1 DIF: Difficulty: Easy REF: p. 43 OBJ: LO: 2-5 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 20. The common law tradition is mostly spread in non-English speaking countries. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 43 OBJ: LO: 2-5 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge 21. Contracts in civil law countries tend to be long and detailed compared to contracts in common law countries. ANS: F PTS: 1 DIF: Difficulty: Easy REF: p. 44 OBJ: LO: 2-5 NAT: BUSPROG: Analytic KEY: Bloom's: Knowledge