Deck 1: Globalization

Question 1

One of the UN's central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development.

Answer 1

True
Explanation: Although the UN is perhaps best known for its peacekeeping role, one of the organization's central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development-all issues that are central to the creation of a vibrant global economy.

Question 2

"Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade barriers against each other, which contributed to the Great Depression of the 1930s.

Answer 2

False
Explanation: The typical aim of tariffs on imports of manufactured goods was to protect domestic industries from foreign competition. One consequence, however, was "beggar thy neighbor" retaliatory trade policies, with countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.

Question 3

Non-U.S. firms increasingly began to invest across national borders because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Answer 3

True
Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders. The motivation for much of this foreign direct investment by non-U.S. firms was the desire to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Question 4

The Uruguay Round, finalized in December 1993, reduced protection for patents, trademarks, and copyrights.

Question 5

The cost of microprocessors continues to fall, while their power increases. This statement supports the predictions made by Moore's Law.

Question 6

The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market.

Question 7

The most global markets currently are markets for consumer products.

Question 8

A company does not need a large size to facilitate, and benefit from, the globalization of markets.

Question 9

Companies hope to lower their overall cost structure or improve the quality or functionality of their product offering through globalization of production.

Question 10

Rivers Inc., a U.S. based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. This is an example of foreign direct investment.

Question 11

Outsourcing is a process that is limited to manufacturing enterprises.

Question 12

Globalization critics argue that the decline in unskilled wage rates is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.

Question 13

Evidence suggests that technological change has had a bigger impact than globalization on the declining share of national income enjoyed by labor.

Question 14

Doing business in Russia involves risks because the country has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government.

Question 15

The World Bank is known as the lender of the last resort.

Question 16

World Bank gives an aid of 100 million dollars to Kenya for creating rural health care facilities. This is an example of foreign direct investment.

Question 17

The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties.

Question 18

A current trend in international business is the decline of medium-sized and small multinationals, known as mini-multinationals.

Question 19

According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950.

Question 20

The globalization of the world economy has resulted in a relative increase in the dominance of U.S. firms in the global marketplace.

Question 21

In 2008 and 2009, the _____ became the forum though which major nations attempted to launch a coordinated policy response to the global financial crisis, which started in America.

A) GATT
B) Group of Ten (G20)
C) Group of Twenty (G20)
D) World Trade Organization

Question 22

Globalization of markets results in markets becoming _____.

A) more interdependent
B) less diverse
C) more protected
D) less competitive

Question 23

The ______ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states.

A) International Development Association
B) World Bank
C) International Court of justice
D) World Trade Organization

Question 24

Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honor debts incurred by corrupt and dictatorial predecessors.

Question 25

Which of the following has enabled globalization of markets?

A) Marginal differentiation among national markets
B) Falling barriers to cross border trade
C) Reduced homogeneity of material culture across the world
D) Increased government ownership of factors of production

Question 26

According to critics of globalization, today's interdependent global economy limits a nation's national sovereignty.

Question 27

Which of the following is true about the International Monetary Fund?

A) It is primarily responsible for policing the world trading system.
B) It is seen as the lender of last resort to nation-states whose economies are in turmoil.
C) It is responsible for establishing multinational treaties to govern the global business system.
D) It was established to formulate a coordinated policy response to financial crises in developing nations.

Question 28

The World Trade Organization promotes the:

A) lowering of barriers to cross-border trade and investment.
B) development of poor nations through low-interest loans.
C) state ownership of major enterprises.
D) regulation of national economies.

Question 29

The shift toward a more integrated and interdependent world economy is referred to as _____.

A) outsourcing
B) international marketing
C) privatization
D) globalization

Question 30

A firm does not have to become a multinational enterprise to engage in international business.

Question 31

The General Agreement on Tariffs and Trade (GATT) was responsible for ____.

A) protecting government owned enterprises
B) policing the global marketplace
C) limiting nuclear testing
D) promoting environment friendly technology

Question 32

Which of the following is a consequence of globalization?

A) Decreasing interdependence between national economies
B) Increasing outsourcing of services
C) Differentiation of material culture
D) Increase in barriers to cross-border trade

Question 33

Which of the following factors hinders globalization of consumer goods market?

A) National differences in tastes and preferences
B) Higher production costs in developed nations
C) Homogenization of material culture
D) Increased outsourcing of goods and services

Question 34

The Uruguay Round provided:

A) reduced protection for patents, trademarks, and copyrights.
B) enhanced protection for patents, trademarks, and copyrights.
C) increased trade barriers.
D) reduced coverage of services and manufactured goods.

Question 35

Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by globalizing their markets. This involves _____.

A) regulating markets
B) privatizing state-owned enterprises
C) decreasing competition
D) reducing foreign investment

Question 36

Early outsourcing efforts were primarily confined to _____.

A) health care
B) service activities
C) technological research
D) manufacturing activities

Question 37

Which of the following is an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe?

A) Transportation costs
B) Government deregulations
C) Reduction of barriers to trade between countries
D) Reduction of barriers to foreign direct investment

Question 38

Managing an international business is much easier than managing a domestic business.

Question 39

A U.S. investment firm, Fin-Smart, set up a customer service call center in India to take advantage of the lower labor costs. This is called ____.

A) homogenizing markets
B) vertical integration
C) international outsourcing
D) horizontal integration

Question 40

According to supporters of free trade, as countries get richer they commit greater violation of environmental and labor regulations.

Question 41

_____ have/has the most to gain from reductions in agricultural tariffs and subsidies that are a part of the Doha agenda.

A) The world's developed nations
B) The world's poorer nations
C) European nations
D) The United States

Question 42

The value of international trade in services now accounts for about _____ of the value of all international trade.

A) 15%
B) 20%
C) 30%
D) 40%

Question 43

The average tariff rates for manufactured goods have fallen significantly since 1950 and now stand at about _____.

A) 18%
B) 5.9%
C) 4.8%
D) 1.5%

Question 44

Which of the following is true regarding the WTO?

A) WTO stands for World Transition Organization.
B) The WTO was succeeded by GATT.
C) As of 2015, the WTO has 160 members.
D) The WTO is policed by the United Nations.

Question 45

Containerization allows:

A) reduction of the time needed to get from one location to another.
B) simplification of transshipment from one mode of transport to another.
C) buyers and sellers to find each other easily in a global economy.
D) enterprises to coordinate and control a globally dispersed production system.

Question 46

_____ predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.

A) Keynes's Law
B) Say's Law
C) Moore's Law
D) Sullivan Principles

Question 47

Which of the following is a factor of production?

A) tariffs
B) transportation costs
C) capital
D) government

Question 48

The _____ was established on October 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security.

A) World Trade Organization
B) United Nations
C) G20
D) World Bank

Question 49

Which of the following is focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments?

A) The WTO
B) The GATT
C) The World Bank
D) The IMF

Question 50

In late 2001, the WTO launched a new round of talks in Doha aimed at:

A) helping member states to cope with financial crisis.
B) liberalizing of the global trade and investment framework.
C) protecting national economies from global competition.
D) promoting higher standards of living in all member states.

Question 51

The volume of world trade in merchandise growing faster than world GDP implies that:

A) more firms are dispersing their production processes to global locations.
B) the economies of the world's nation-states are becoming more independent from each other.
C) the global economy is headed for a large downward correction.
D) the world is becoming poorer.

Question 52

In 2009, the financial crisis in the United States was triggered by:

A) the global hike in the price of crude oil
B) the slowdown in U.S. imports
C) the problems in the U.S. subprime mortgage lending market
D) the artificial fixing of currency rate by China

Question 53

Which of the following is included in world merchandise trade?

A) Service industry
B) Agricultural labor
C) Foreign services
D) Mining products

Question 54

The G20 was originally established to:

A) preserve peace through international cooperation and collective security.
B) maintain order in the international monetary system.
C) formulate a coordinated policy response to financial crises in developing nations.
D) manage, regulate, and police the global marketplace.

Question 55

The growth of international trade in services has been driven by advances in:

A) communications.
B) transportation.
C) agriculture.
D) energy.

Question 56

_____ occurs when a firm exports goods or services to consumers in another country.

A) International trade
B) Foreign direct investment
C) Inward investment
D) Outsourcing

Question 57

Which of the following was established to maintain order in the international monetary system?

A) The WTO
B) The GATT
C) The World Bank
D) The IMF

Question 58

Which of the following is true of the IMF?

A) It is often seen as the lender of first choice to nation-states whose economies are in turmoil.
B) Its loans come with no strings attached.
C) It is the less controversial of the two sister institutions, the IMF and the World Bank.
D) It has emerged as a significant player in the global economy.

Question 59

_____ occurs when a firm invests resources in business activities outside its home country.

A) Foreign direct investment (FDI)
B) Direct international investment (DII)
C) International trade (IT)
D) Foreign direct production (FDP)

Question 60

The volume of world trade in merchandised goods has been:

A) growing at the same rate as world GDP.
B) growing faster than world GDP.
C) growing slower than world GDP.
D) declining faster than world GDP.

Question 61

The downside of increased globalization is:

A) global financial contagions are less likely.
B) a severe crisis in one region can affect the entire globe.
C) one nation may become too powerful.
D) the potential for increased exploitation of undeveloped nations by developed nations.

Question 62

Which of the following countries has been the largest recipient of foreign direct investment and received about $60 billion to $100 billion a year in inflows in 2004-2012?

A) Brazil
B) Russia
C) India
D) China

Question 63

During the last two decades, change in Latin America has been characterized by:

A) an increase in debt.
B) hyperinflation.
C) the sale of state-owned enterprises to private investors.
D) protests against foreign investment.

Question 64

The rise of mini-multinationals means that:

A) small businesses are becoming increasingly involved in international trade and investment.
B) it is increasingly difficult to enter the large multinational market.
C) countries are working together to minimize MNE influence.
D) there is greater state involvement in industry.

Question 65

Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers:

A) is due to technological changes that create greater demand for skilled workers.
B) is due to the migration of low-wage manufacturing jobs offshore.
C) can be checked by increasing government ownership of enterprises.
D) can be checked by limiting free trade and foreign investment.

Question 66

A multinational enterprise (MNE) is a firm that:

A) exports its products to multiple countries.
B) has production units in more than two countries.
C) does most of its business on the Internet.
D) lists its securities on a public exchange.

Question 67

Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects:

A) a slowdown in global economic activity.
B) the increasing share of the United States in the total FDI stock.
C) the decline in cross-border flows of foreign direct investment.
D) the increasing internationalization of business corporations.

Question 68

A study published in 2011 by the OECD noted that:

A) the real household income of the unskilled workers in the United States increased more in comparison to that of the skilled workers.
B) in almost all countries real income levels declined over the 20-year period studied.
C) the falling unemployment rates brought gains to low-wage workers and fairly broad-based wage growth.
D) the gap between the poorest and richest segments of society in some OECD countries had widened.

Question 69

Which of the following is a risk associated with globalization?

A) Restrictions on competition
B) Global financial contagion
C) Excessive market regulation
D) Differentiation of markets

Question 70

Since the 1960s, which of the following has been a notable trend in the demographics of the multinational enterprise?

A) The decline of multinational companies in the manufacturing sector
B) The growth of government-owned multinational enterprises
C) The decline of non-U.S. multinationals
D) The growth of mini-multinationals

Question 71

Why did many Japanese firms invest in North America and Europe in the 1970s?

A) To avoid a highly competitive domestic market.
B) To exploit high domestic tariff barriers.
C) To create a hedge against unfavorable currency movements.
D) To take advantage of low labor costs.

Question 72

If China continues to move toward greater free market reforms they:

A) may move from industrial superpower to third-world status.
B) will likely see a decrease in their GDP per capita.
C) may move from third-world to industrial superpower status.
D) will likely give global market share to Western and Japanese enterprises.

Question 73

The relative decline of the United States in the share of world output and world exports reflects:

A) an increase in the barriers to foreign trade in the United States.
B) the deepening of the global financial crisis.
C) the reduced industrialization in developing nations.
D) the growth in the economic development of the world economy.

Question 74

After the United States, the second-largest source country of MNEs is:

A) Japan.
B) China.
C) a tie between France and the United Kingdom.
D) a tie between Germany and the United Kingdom.

Question 75

In the last two decades, Latin American countries like Brazil, Mexico, and Chile have _____.

A) embraced communist principles
B) promoted government ownership of enterprises
C) experienced increasing debt and inflation
D) welcomed foreign investment

Question 76

The rise of mini-multinationals means that:

A) small businesses are becoming increasingly involved in international trade and investment.
B) it is increasingly difficult to enter the large multinational market.
C) countries are working together to minimize MNE influence.
D) there is greater state involvement in industry.

Question 77

In order to be classified as an MNE, a company must have productive activities in at least _____ countries.

A) two
B) three
C) four
D) twenty

Question 78

Between 1960 and 2013, the U.S. share of world exports of goods and services:

A) has increased from 9.7% to 38.3%.
B) has decreased from more than 20% to 9.7%.
C) has slipped to second place, behind only Japan.
D) although in decline, has remained in first place with China a close second.

Question 79

Which of these statements pertaining to cross-border FDI flows is true?

A) There was a growth of FDI between 2004 and 2007.
B) A slump in FDI from 1998 to 2000 was followed by a surge from 2001 to 2003.
C) Among developing nations, the largest recipient of FDI has been Russia.
D) The dramatic increase in FDI reflects the decreasing internationalization of business corporations.

Question 80

The total cumulative value of foreign investments is best referred to as:

A) accumulation of foreign shares.
B) portfolio investments.
C) stock of foreign direct investments.
D) stock market investments.