Deck 13: Globalization and the Spread of Instability

Question 1

What is "global capitalism"?

A) Capitalism that exists in more than one country.
B) Most countries are predominantly capitalist.
C) A few capitalist countries dominate the world economy.
D) Capitalism that is based primarily on international trade and investment.

Answer 1

B

Question 2

What are the three mechanisms that transmit recessions and expansions from one country to another?

A) Exports of goods, exports of services, and exports of currency.
B) International trade, international investment, and international finance.
C) Consumers, businesses, and governments.
D) The United Nations, the World Bank, and the International Labor Organization.

Answer 2

B

Question 3

If the United States is the most important market for Bolivian exports, then a recession in the United States is likely to

A) increase demand for goods imported from Bolivia.
B) lead to an economic expansion in Bolivia.
C) lead to an economic downturn in Bolivia.
D) have no effect on Bolivia's economy.

Answer 3

C

Question 4

Assume Toyota builds a new plant in Mississippi to produce the Prius. This is an example of

A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Question 5

A resident of Canada purchases 1,000 shares of stock in Dell Computers. This is an example of

A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Question 6

How does a recession in the United States affect the level of foreign investment undertaken by American businesses?

A) Businesses tend to increase the level of foreign investment during a recession.
B) Businesses tend to decrease the level of foreign investment during a recession.
C) Businesses tend to maintain the same level of foreign investment over the business cycle.
D) It is against the law businesses to engage in foreign investment during a recession.

Question 7

In general, what is the attitude of businesses toward foreign investments compared to domestic investment?

A) Businesses are more cautious about making foreign investments.
B) Businesses are more cautious about making domestic investment.
C) Businesses are equally cautious about all investments.
D) Businesses will engage either in foreign investment or domestic investment but not both.

Question 8

A resident of Dubai buys $1,000,000 in U.S. government bonds. This is an example of

A) international investment.
B) international finance.
C) international trade.
D) international subcontracting.

Question 9

The global integration of the world economy means that

A) most industrial countries experience tend recessions at the same time.
B) a recession in one industrialized country will be offset by a boom in another country.
C) industrial countries are relatively immune from international financial instability.
D) most industrial countries now use the same currency.

Question 10

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect

A) U.S. imports of automobiles from Japan will increase.
B) U.S. imports of automobiles from Japan will decrease.
C) U.S. imports of automobiles from Japan will remain the same.
D) United States will import no automobiles from Japan.

Question 11

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect

A) that aggregate demand in Japan will increase.
B) that aggregate demand in Japan will decrease.
C) that aggregate demand in Japan will remain the same.
D) that Japan will have no aggregate demand.

Question 12

The conservative position on the global movement of financial capital is that

A) the rapid movement of financial capital into and out of a country can be destabilizing to the country's economy.
B) the free movement of financial capital from one country to another will ensure that it will be put to the most productive use.
C) the movement of financial capital out of the developed countries and into the developing countries will lead to greater inefficiency and lower productivity.
D) all international movement of financial capital should be regulated by the International Monetary Fund.

Question 13

The progressive position on the global movement of financial capital is that

A) the rapid movement of financial capital into and out of a country can be destabilizing to the country's economy.
B) the free movement of financial capital from one country to another will ensure that it will be put to the most productive use.
C) the movement of financial capital out of the developed countries and into the developing countries will lead to greater inefficiency and lower productivity.
D) all international movement of financial capital should be regulated by the International Monetary Fund.

Question 14

Conservatives point to the positive aspects of globalization including

A) the increase in the growth rate of the GDP of the global economy since 1970.
B) the increase in the growth rate of GDP per capita since 1970.
C) the increase in the profit rate of the 500 largest transnational corporations since 1970.
D) the increase in the growth rate of real global investment since 1970.

Question 15

Progressives point to the negative aspects of globalization including

A) the decrease in the growth rate of the GDP of the global economy since 1970.
B) the decrease in the growth rate of GDP per capita since 1970.
C) the increase in global inflation since 1970.
D) the decrease in the volume of global trade since 1970.

Question 16

The wealth of individuals in all countries has been estimated at

A) $125 million
B) $125 billion
C) $125 trillion
D) $125 quadrillion

Question 17

The world's richest 1% of households own ____________of the world's wealth.

A) 1%
B) 20%
C) 40%
D) 60%

Question 18

The poorest 50% of the world's population own ____________of the world's wealth.

A) 1%
B) 15%
C) 30%
D) 50%

Question 19

A key indicator of global warming is the increase in greenhouse gases such as

A) sodium chloride.
B) carbon dioxide.
C) helium.
D) sulfuric acid.

Question 20

The term, "outsourcing" means

A) turning over part of a production process to an outside supplier often located in another country.
B) purchasing raw materials from one country to be used in a production process in another country.
C) purchasing finished products from another country.
D) a recreational activity involving locating the source of major rivers.

Question 21

Free trade means

A) all countries are permitted to engage in international trade.
B) there are no goods that are prohibited from entering the country.
C) there is no international trade embargo in place.
D) there are no tariffs, quotas or other barriers to international trade.

Question 22

In 1998 the International Monetary Fund extended a loan to the South Korean government on the condition that it engaged in extensive privatization. What is "privatization"?

A) The process of selling or giving away public property and enterprises to individuals.
B) The process of giving grants or tax breaks to private companies.
C) The process of expropriating private property for use by the government.
D) The process of allowing private citizens to participate in government.

Question 23

The use of the internet is often cited as evidence of increased globalization. Approximately how many of the world's 6.6 billion people are internet users (as of 2005)?

A) 3 billion
B) 1.5 billion
C) 500 million
D) 500 thousand

Question 24

Over the past 30 years, globalization has led to

A) strong economic growth in almost all countries.
B) weak economic growth in almost all countries.
C) negative economic growth in almost all countries.
D) uneven economic growth with strong growth in some regions and weak growth in others.