Deck 1: Globalization

Question 1

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

Answer 1

True

Question 2

Foreign direct investment by non-U.S. firms increased because they wanted to disperse production activities to optimal locations and to build a direct presence in major foreign markets.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

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.

Question 7

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

Question 8

Because Russia has shown signs of shifting back toward greater state involvement in economic activity and authoritarian government, doing business in Russia is considered risky.

Question 9

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 10

When Cyprus had a financial crisis, it went to the World Bank, known as the lender of last resort, to bail it out.

Question 11

Johann's business does not make consumer products; therefore, it would not be likely to participate in global markets.

Question 12

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

Question 13

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

Question 14

According to globalization critics, 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 15

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 16

Globalization of production can help companies lower their overall cost structure or improve the quality or functionality of their product offering.

Question 17

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

Question 18

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

Question 19

Outsourcing is a process that is limited to manufacturing enterprises.

Question 20

Since Wally's Whistles is a medium-size business, it wouldn't benefit from globalization.

Question 21

Managing an international business is quite similar to managing a domestic business.

Question 22

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

Question 23

The World Trade Organization promotes

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

Question 24

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 25

Since the collapse of communism over a quarter of a century ago, formerly 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 26

Globalization of markets results in markets becoming

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

Question 27

What impedes firms from achieving 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 28

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

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

Question 29

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 30

Early outsourcing efforts were primarily confined to

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

Question 31

In 2008 and 2009, the ________ became the forum through 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 32

What 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 33

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

Question 34

Which of the following is a consequence of globalization?

A) decreasing interdependence between national economies
B) increasing outsourcing of services
C) differentiating of material culture
D) increasing barriers to cross-border trade

Question 35

A firm needs to become a multinational enterprise to engage in international business.

Question 36

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 37

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 38

________ refers to the shift toward a more integrated and interdependent world economy

A) Outsourcing
B) International marketing
C) Privatization
D) Globalization

Question 39

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 40

According to supporters of debt relief, new democratic governments in poor nations should not be forced to honor debts incurred by corrupt and dictatorial predecessors.

Question 41

Toyota is a multinational enterprise (MNE), which is a firm that

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

Question 42

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, due to political pressure.
C) liberal lending policies by U.S. banks to homeowners.
D) the artificial fixing of the currency rate by China.

Question 43

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 44

ABC Global has decided to invest resources in business activities outside its home country. This is called

A) foreign direct investment (FDI).
B) direct international investment (DII).
C) international trade (IT).
D) foreign direct production (FDP).

Question 45

The growth of international trade in service activities has been driven by advances in

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

Question 46

The volume of world trade in merchandise is growing faster than world GDP. This 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 47

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 48

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 49

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

A) 18 percent.
B) 5.9 percent.
C) 4.8 percent.
D) 1.6 percent.

Question 50

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 51

Which of the following focuses 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 52

Which of the following countries has been the largest recipient of foreign direct investment and, in 2016, received a record $249.8 billion in inflows?

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

Question 53

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.

Question 54

Which of the following is a factor of production?

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

Question 55

________ 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 Principle

Question 56

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 57

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 58

________ 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 59

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 provide a hedge against unfavorable currency movements
D) to take advantage of low labor costs

Question 60

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 61

Which of the following is viewed by large segments of the population in many countries as a detrimental effect of antiglobalization?

A) job growth in industries under attack from foreign competitors
B) upward pressure on the wage rates of unskilled workers
C) environmental degradation
D) cultural isolationism of global media and MNEs

Question 62

While the hump-shaped relationship between income levels and pollution levels seems to hold across a wide range of pollutants, ________ represent an important exception.

A) sulfur dioxide emissions
B) lead concentrations
C) carbon dioxide emissions
D) water quality standards

Question 63

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 64

NAFTA was passed only after

A) China agreed to establish a higher minimum wage.
B) the United States agreed to limit the number of jobs that could be outsourced.
C) Mexico committed to tougher enforcement of environmental protection regulations.
D) Canada committed to establish new limits on FDI.

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 number of econometric studies have found consistent evidence of a hump-shaped relationship between income levels and pollution levels. According to this, as an economy grows and income levels rise

A) initially the pollution levels remain low.
B) after a while, the pollution levels decrease.
C) the pollution levels also rise in proportion to the economic growth.
D) there is increasing industrialization, which leads to greater pollution.

Question 67

If China continues to move toward greater free market reforms it

A) may move from industrial superpower to third-world status.
B) will likely see a decrease in 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 68

The World Trade Organization has estimated that the developed nations of the world can raise global economic welfare by $128 billion by

A) removing subsidies given to their agricultural producers.
B) increasing tariff barriers to trade in agriculture.
C) increasing outsourcing of manufacturing processes.
D) reducing defense expenditure.

Question 69

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 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

Globalization is criticized because it increases the power of

A) governments to own enterprises.
B) unskilled labor to form labor unions.
C) supranational organizations over nation-states.
D) nation-states to regulate markets and reduce competition.

Question 72

A study published in 2011 by the OECD noted that

A) the real household income of unskilled workers in the United States increased more in comparison to that of 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 73

Which of the following is a reason that little progress has been made toward the ambitious goals set at the 1992 Earth Summit in Rio de Janeiro?

A) China has shown a strong appetite to adopt tighter pollution controls.
B) Political cooperation in the U.S. Congress promotes domestic action.
C) There is a culture of denial in the United States.
D) Trade liberalization efforts have not been rolled back.

Question 74

In the last two decades, Latin American countries such as 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 75

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

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

Question 76

Based on several studies, the data suggest that real wages

A) for unskilled workers have decreased while real wages for skilled workers have increased.
B) for both skilled and unskilled labor have decreased.
C) for both skilled and unskilled labor have increased.
D) for unskilled workers have increased while real wages for skilled worker have decreased.

Question 77

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 78

During the past 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 79

The rise in the number 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 80

The two largest emitters of carbon dioxide are

A) China and the United States.
B) China and the United Kingdom.
C) Canada and the United States.
D) Mexico and the United States.