Question 1

International investment portfolios create cross-border flows of investment securities like stocks and bonds.

Accepted Answer

International investment portfolios typically include a mix of securities from different countries, creating cross-border flows of investments.

Question 2

Removing trade barriers that were protecting an inefficient industry is likely to cause job losses in that industry.

Accepted Answer

When trade barriers, such as tariffs or quotas, are removed, it allows for increased competition from more efficient foreign companies. This increased competition can lead to job losses in domestic industries that were previously protected from competition. However, removing trade barriers can also lead to job gains in other industries that benefit from increased trade and competition.

Question 3

One of the key benefits of international trade is that it allows consumers and producers to benefit by exploiting each country's comparative advantage.

Accepted Answer

International trade allows countries to specialize in producing goods and services in which they have a comparative advantage, resulting in greater efficiency and lower costs. This, in turn, leads to lower prices for consumers and increased profits for producers.

Question 4

The ability to outsource is a key disadvantage of international trade for companies looking to reduce costs.

Accepted Answer

Outsourcing is generally considered an advantage of international trade as it allows companies to reduce costs by taking advantage of lower labor costs and efficiencies in other countries.

Question 5

When looking to international financial investments,investors are more likely to think long term,making international markets more stable than a national market.

Accepted Answer

International markets often involve additional risks such as currency fluctuations, political instability, and differences in regulation, which can lead to increased volatility compared to national markets. Investors may not always think long term due to these uncertainties.

Question 6

While globalization has increased the exportation of unskilled jobs from the U.S.to low-wage countries,white collar jobs are rarely outsourced abroad.

Accepted Answer

While it is true that globalization has increased the outsourcing of unskilled jobs from the U.S. to low-wage countries, white collar jobs are also increasingly being outsourced to countries such as India and the Philippines where highly educated workers can be hired at lower wages. This trend is known as offshoring.

Question 7

To avoid social dumping,the U.S.and Europe are forcing other countries to adopt principles of fair trade.

Accepted Answer

Social dumping refers to a practice where companies move production to countries with lower labor standards or costs, and while the U.S. and Europe have taken steps to promote fair trade and labor rights, they are not forcing other countries to adopt these principles. Instead, they often negotiate trade agreements that include labor standards or encourage fair trade through incentives and voluntary compliance.

Question 8

U.S.trade policy has tended to focus on reducing tariffs and other barriers to trade.

Accepted Answer

This statement is true. U.S. trade policy has historically focused on reducing tariffs and other barriers to trade, particularly through free trade agreements and negotiations with other countries.

Question 9

The phrase,"The world is flat," refers to the idea that information technology gives people from all corners of the world the opportunity and ability to compete in a global economy.

Accepted Answer

This phrase was popularized by author Thomas Friedman in his book "The World is Flat: A Brief History of the Twenty-first Century". The concept suggests that advancements in technology have created a level playing field for people, businesses, and countries to participate in a globalized economy.

Question 10

There are few benefits of immigration to the receiving country while there are many benefits to the immigrants' home country.

Accepted Answer

Immigration can offer significant benefits to the receiving country, including economic growth through an expanded labor force, innovation, cultural diversity, and addressing demographic challenges such as an aging population. Conversely, the immigrants' home country can experience benefits such as remittances but also face challenges like brain drain.

Question 11

Because immigration is tightly controlled,the vast majority of immigrants to the U.S.are skilled workers.

Accepted Answer

The statement is false. While the U.S. does have skilled worker visas, there are also many family-based visas and diversity visas that allow for a variety of immigrants with different skills and backgrounds to come to the country. Additionally, there are also undocumented immigrants who may not have gone through any type of controlled immigration process.

Question 12

Social dumping occurs when a foreign competitor is able to unfairly sell goods or services at a lower price than domestic producers because they are able to be more efficient.

Accepted Answer

Social dumping occurs when a foreign competitor is able to unfairly sell goods or services at a lower price than domestic producers because they pay workers lower wages or exploit workers in other ways, not just because they are more efficient.

Question 13

One of the advantages to free trade is that the benefits of trade flow are shared equally between labor and management.

Accepted Answer

The benefits of free trade do not necessarily flow equally between labor and management. How the benefits are distributed depends on factors such as bargaining power, supply and demand, and government policies. While free trade can lead to increased economic growth and job opportunities, it may also result in job losses and wage stagnation for some workers, especially in industries that face increased competition from foreign imports. The benefits of free trade may also be skewed towards large corporations or wealthy individuals, rather than being evenly shared among all members of society.

Question 14

Globalization occurs when there is increased economic integration among countries.

Accepted Answer

Globalization refers to the increased interconnectedness and interdependence of countries in terms of goods, services, capital, and people. This usually leads to increased economic integration among countries.

Question 15

Relying on corporate codes of conduct to establish fair labor standards in an international market is a lot like relying on human resource policies to establish fair labor standards in a domestic market.

Accepted Answer

Both corporate codes of conduct and human resource policies are internal policies created by a company, and while they can provide some guidance and framework for fair labor standards, they do not have any legal binding or enforcement power. Therefore, relying solely on them is not enough to establish fair labor standards, especially in an international market where different countries have different labor laws and regulations.

Question 16

If global markets are imperfect,a disproportionate share of profits is likely to end up with shareholders,rather than employees.

Accepted Answer

When global markets are imperfect, shareholders can take advantage of the situation to earn higher profits, which may come at the expense of fair compensation for employees. This is because imperfect markets may allow shareholders to have more bargaining power in setting wages and benefits, which can result in a higher share of profits going to shareholders rather than employees.

Question 17

The cross-border flow of goods and services is called international trade.

Accepted Answer

International trade refers to the exchange of goods and services across national borders.

Question 18

Foreign direct investment can result in exploitation of labor,particularly in export processing zones.

Accepted Answer

Foreign direct investment often leads to the establishment of export processing zones in developing countries, where labor laws may be weakly enforced and workers may be subject to exploitation such as low wages, long hours, and poor working conditions.

Question 19

Bantani Corporation,a large manufacturer of food packaging products,decides to purchase an existing manufacturing plant in India.This is an example of foreign direct investment.

Accepted Answer

Foreign direct investment refers to the investment made by a company in a foreign country by either acquiring a company or setting up a new business venture. In this case, Bantani Corporation is acquiring an existing manufacturing plant in India, which qualifies as foreign direct investment.

Question 20

Globalization increases the demand for unskilled labor in the U.S.which in turn reduces labor's bargaining power.

Accepted Answer

Globalization tends to increase the demand for skilled labor in the U.S. while reducing the demand for unskilled labor. This can lead to a widening wage gap and reduced bargaining power for unskilled workers.

Quiz 11: Globalization