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Exam 2: The Global Economic Environment

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Question 41

Multiple Choice

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Global marketers should take note of the fact that almost half of the world's population is located in:

A) low-income countries.
B) lower-middle-income countries.
C) upper-middle-income countries.
D) high-income countries.
E) higher-middle-income countries.

F) C) and D)
G) A) and C)

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Question 42

Multiple Choice

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Prahalad and Hammond have identified several assumptions and misconceptions about the "bottom of the pyramid" (BOP) that need to be corrected. All of the following mistaken assumptions are correct except:

A) The poor are too concerned with fulfilling basic needs to "waste" money on nonessential goods.
B) The goods sold in developing markets are so expensive that there is no room for a new market entrant to make a profit.
C) The poor have no money.
D) People in BOP markets cannot use advanced technology.
E) Global companies that target BOP markets will be criticized for exploiting the poor.

F) None of the above
G) C) and E)

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Question 43

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A country with a positive current account balance has a trade deficit; that is, the outflow of money to pay for imports exceeds the inflow of money for sales of exports.

Authors Prahalad and Hammond have identified several assumptions and misconceptions about the "bottom of the pyramid" (BOP). Explain these assumptions, giving examples.

China is the first BRICS nation in the upper-middle-income category with a GNI per capita income of $6,560 in 2013.

The CEO of Otis Elevators says they measure elevator populations in countries as units installed per thousand people. According to this, China is about one-half an elevator per thousand people.

For decades, the economies of China, the former Soviet Union, and India functioned according to the tenets of:

The world economy has changed profoundly as evident by the fact that the global competitors have steadily displaced or absorbed local competitors.

The United States' growing trade deficit reflects a number of factors which exclude:

Some people believe that marketing is relevant only in affluent, industrialized countries, whereas others believe that the role of marketing is to identify people's needs and wants worldwide, irrespective of the economy. Giving examples of companies involved in energy conservation and technology, support the latter argument.

With a 2013 GNI per capita of $1,570, India has transitioned out of the low-income category and is now classified as an upper-middle-income country, also known as an industrializing or developing country.

Market capitalism is an economic system in which:

Hedging exchange rate exposure involves establishing an offsetting currency position such that the loss of one currency position is offset by a corresponding gain in some other currency.

The World Bank has developed a four-category classification system for stages of marketing development which uses per capita gross national income (GNI)as a base.

The Big Mac Index shows that the price of the Big Mac in China converted from the local currency, the yuan, to be $2.18, whereas its price in the United States is $3.73. This shows that:

The "balance of payments" is a record of all economic transactions between the residents of a country and the rest of the world. It is divided into the current and capital accounts. Current accounts include all of the following except:

About 25% of the world population is included in the low-income economic countries category as per the World Bank classification system.

Singapore banned the import, manufacture, and sales of chewing gum in the country since wads of gum were making a mess on sidewalks, buses, and subway trains. Violators are subject to severe penalties, and before buying a pack consumers must register their names and addresses. This, according to author William Greider, demonstrates that Singapore's government:

The top global merchandise exporter is:

In recent times, trade has replaced capital movements as the driving force of the world economy.