Question 1

The United States accounted for a significantly larger share of the world economy in 2012 than it did in the 1960s.

Accepted Answer

During the 1960s, the United States routinely accounted for 20 percent of world exports of manufactured goods, but the U.S. share of world exports of goods and services had slipped to 8.7 percent by 2012, behind that of China.

Question 2

The World Trade Organization, the International Monetary Fund and its sister institution the World Bank, and the United Nations were all created by voluntary agreement between individual nation-states.

Accepted Answer

Over the past half century, a number of important global institutions have been created to help manage, regulate, and police the global marketplace and to promote the establishment of multinational treaties to govern the global business system. These include the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO); the International Monetary Fund (IMF) and its sister institution, the World Bank; and the United Nations (UN). All these institutions were created by voluntary agreement between individual nation-states, and their functions are enshrined in international treaties.

Question 3

By offering the same basic product worldwide, firms help to create a global market.

Accepted Answer

It has been argued for some time that the tastes and preferences of consumers in different nations are beginning to converge on some global norm, thereby helping to create a global market. By offering the same basic product worldwide, firms help to create a global market.

Question 4

The Uruguay Round extended GATT to cover services as well as manufactured goods.

Accepted Answer

The Uruguay Round reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the international trading system.

Question 5

The real costs of information processing and communication have fallen dramatically in the past two decades.

Accepted Answer

As a result of technological innovations, the real costs of information processing and communication have fallen dramatically in the past two decades.

Question 6

Although most international trade and investment are still conducted by large firms, many medium-size and small businesses are becoming increasingly involved in international trade and investment.

Accepted Answer

Although most international trade and investment are still conducted by large firms, many medium-size and small businesses are becoming increasingly involved in international trade and investment.

Question 7

As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities.

Accepted Answer

Over the past four decades a fundamental shift has been occurring in the world economy. We have been moving away from a world in which national economies were relatively self-contained entities, isolated from each other by barriers to cross-border trade and investment; by distance, time zones, and language; and by national differences in government regulation, culture, and business systems.

Question 8

Substantial impediments, such as barriers to foreign direct investment, make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe.

Accepted Answer

Substantial impediments make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe. These impediments include formal and informal barriers to trade between countries, barriers to foreign direct investment, transportation costs, issues associated with economic and political risk, and the shear managerial challenge of coordinating a globally dispersed supply chain.

Question 9

The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding it easier to protect themselves from attack by foreign competitors.

Accepted Answer

The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding their home markets under attack from foreign competitors.

Question 10

The WTO is seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.

Accepted Answer

The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.

Question 11

As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries.

Accepted Answer

Significant differences still exist among national markets along many relevant dimensions, including consumer tastes and preferences, distribution channels, culturally embedded value systems, business systems, and legal regulations. These differences frequently require companies to customize marketing strategies, product features, and operating practices to best match conditions in a particular country.

Question 12

Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.

Accepted Answer

In economic terms, the most important major innovations in transportation technology are probably the development of commercial jet aircraft and superfreighters and the introduction of containerization, which simplifies transshipment from one mode of transport to another. It has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.

Question 13

Beginning in the 1970s, European and Japanese firms began to shift labor-intensive manufacturing operations from developing nations to their home countries where labor costs were lower.

Accepted Answer

Beginning in the 1970s, European and Japanese firms began to shift labor-intensive manufacturing operations from their home markets to developing nations where labor costs were lower.

Question 14

The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity.

Accepted Answer

The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity.

Question 15

Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically.

Accepted Answer

Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically, a trend that reflects the increasing internationalization of business corporations.

Question 16

Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

Accepted Answer

Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

Question 17

The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country.

Accepted Answer

The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country.

Question 18

The IMF is less controversial than its sister institution, the World Bank.

Accepted Answer

The World Bank is less controversial than its sister institution, the IMF. The World Bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments, while the IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations.

Question 19

As a result of international trade, the economies of the world's nation-states are becoming less intertwined.

Accepted Answer

The economies of the world's nation-states are becoming more intertwined. As trade expands, nations are becoming increasingly dependent on each other for important goods and services.

Question 20

After World War II, the advanced nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations.

Accepted Answer

Having learned from past experience, the advanced industrial nations of the West committed themselves after World War II to progressively reducing barriers to the free flow of goods, services, and capital among nations.

Quiz 1: Globalization

The United States accounted for a significantly larger share of the world economy in 2012 than it did in the 1960s.

The World Trade Organization, the International Monetary Fund and its sister institution the World Bank, and the United Nations were all created by voluntary agreement between individual nation-states.

By offering the same basic product worldwide, firms help to create a global market.

The Uruguay Round extended GATT to cover services as well as manufactured goods.

The real costs of information processing and communication have fallen dramatically in the past two decades.

Although most international trade and investment are still conducted by large firms, many medium-size and small businesses are becoming increasingly involved in international trade and investment.

As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities.

Substantial impediments, such as barriers to foreign direct investment, make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe.

The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding it easier to protect themselves from attack by foreign competitors.

The WTO is seen as the lender of last resort to nation-states whose economies are in turmoil and whose currencies are losing value against those of other nations.

As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries.

Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances.

Beginning in the 1970s, European and Japanese firms began to shift labor-intensive manufacturing operations from developing nations to their home countries where labor costs were lower.

The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity.

Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically.

Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country.

The IMF is less controversial than its sister institution, the World Bank.

As a result of international trade, the economies of the world's nation-states are becoming less intertwined.

After World War II, the advanced nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations.