Economic Concepts - Part 3

Question 1

Which one of the following international organizations has the promotion of economic development through loans to developing countries as a primary purpose?
	A.  	International Monetary Fund (IMF).
	B.  	World Bank.
	C.  	World Trade Organization (WTO).
	D.  	United Nations (UN).

Answer 1

B. World Bank.

The objective of the World Bank is to promote general economic development, especially in developing countries, primarily by leading for infrastructure, agricultural, education, and similar needs.

Question 2

Which of the following most closely represents the U.S. share of worldwide GDP (output)?
	A.  	90%.
	B.  	50%.
	C.  	25%.
	D.  	10%.

Answer 2

C. 25%.

The U.S. share (percentage) of worldwide GDP (output) is approximately 25%. In 2012 the U.S. share of worldwide GDP was about 22%.

Question 3

In the context of PEST analysis, the analysis of labor law would be most likely to fall under which of the PEST categories?
	A.  	Political.
	B.  	Economic.
	C.  	Social.
	D.  	Technological.

Answer 3

A. Political.

The political factors considered in PEST analysis are concerned with the nature of the political environment and the ways and the extent to which a government intervenes in an economy. The political environment includes, among other factors, labor law, environmental law, and other relevant aspects of law.

Question 4

Which of the following is not a five forces factor used in determining the operating attractiveness of an industry?
	A.  	Bargaining power of customers.
	B.  	Threat of new competition.
	C.  	Political instability.
	D.  	Intensity of rivalry.

Answer 4

C. Political instability.

Political instability is not one of the five factors used in determining the operating attractiveness of an industry. The nature of the political environment would be assessed at a macro-environmental level, not at the level of industry analysis. For example, PEST analysis would consider the political environment of an operating environment.