Question 1

Over the past 30 years the flow of FDI has accelerated faster than the growth in world trade and world output.

Accepted Answer

This statement is true. According to data from the World Bank, FDI flows grew from $49 billion in 1985 to $1.9 trillion in 2017, while world trade grew from $4.4 trillion in 1985 to $17.73 trillion in 2017, and world output grew from $25.4 trillion in 1985 to $80.14 trillion in 2017. Therefore, FDI has grown at a faster rate than both world trade and world output over the past 30 years.

Question 2

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

Accepted Answer

Lowering barriers to international trade allows firms to expand their market beyond a single country, making the world their potential market.

Question 3

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 protected from foreign competitors.

Accepted Answer

The statement is false. The globalization of markets and production implies that firms are facing increased competition from foreign competitors, as their home markets are no longer protected by trade barriers.

Question 4

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

Accepted Answer

The volume of world merchandise trade has indeed grown faster than the world economy since 1950, as per WTO data.

Question 5

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

Accepted Answer

"Beggar thy neighbor" policies involved countries raising trade barriers against each other, which led to decreased international trade and ultimately worsened the economic situation of all countries involved.

Question 6

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

Accepted Answer

The International Monetary Fund (IMF) is known as the lender of last resort, while the World Bank primarily provides loans for development projects.

Question 7

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

Accepted Answer

With advancements in technology and communication, even small companies can easily access global markets and expand their businesses. The size of the company is not a limiting factor in taking advantage of globalization.

Question 8

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

Accepted Answer

Moore's Law states that the number of transistors on a microchip doubles about every two years, leading to an increase in computing power and a decrease in cost. The statement in the question is consistent with this prediction.

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.

Accepted Answer

Foreign direct investment (FDI) is defined as the acquisition of controlling ownership in a company or facility outside a firm's home country. In this scenario, Rivers Inc. is setting up a production unit in China, which involves investing in and controlling a facility outside of their home country, thus making it an example of foreign direct investment.

Question 10

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

Accepted Answer

This is correct. Globalization refers to the increasing interconnectedness and interdependence of the world's economies, cultures, and populations. It involves the free movement of goods, services, people, and ideas across national borders, facilitated by advances in technology, transportation, and communication.

Question 11

Outsourcing is a process that is limited to manufacturing enterprises.

Accepted Answer

Outsourcing is not limited to manufacturing enterprises. It can be used by any type of business or organization to hire external contractors or service providers for various tasks or functions. This can include IT services, customer service, accounting, marketing, and more.

Question 12

The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services.

Accepted Answer

The expansion of world trade actually implies that nations are becoming more interdependent as they rely on each other for goods and services.

Question 13

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.

Accepted Answer

The World Trade Organization 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 WTO member states. The World Bank was set up to promote economic development.

Question 14

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.

Accepted Answer

The given scenario is not an example of foreign direct investment because the World Bank aid provided is not a direct investment in a Kenyan company or entity, it is a grant or loan for a specific project. Foreign direct investment involves a foreign investor making a long-term investment in a foreign country for the purpose of establishing a business or acquiring assets to control or manage.

Question 15

The most global markets currently are markets for consumer products.

Accepted Answer

The most global markets currently are not markets for consumer products-where national differences in tastes and preferences are still often important enough to act as a brake on globalization-but markets for industrial goods and materials that serve a universal need the world over.

Question 16

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.

Accepted Answer

This is stated in Article 55 of the United Nations Charter.

Question 17

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

Accepted Answer

The Uruguay Round actually increased protection for patents, trademarks, and copyrights through the creation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Question 18

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

Accepted Answer

The GATT (General Agreement on Tariffs and Trade) ceased to exist in 1995. It was replaced by the World Trade Organization (WTO). While the WTO did play a role in discussions related to the global financial crisis, it was not the main forum for coordinated policy responses. The G20, which includes major nations such as the United States, China, and Germany, was the primary forum for these discussions.

Question 19

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

Accepted Answer

Globalization of production allows companies to access lower labor costs, favorable regulatory environments, and other cost-saving measures. It also enables them to tap into new markets, improve efficiency, and increase competitiveness, which can lead to improved quality or functionality of their products.

Question 20

The health care sector in the U.S.cannot avail the benefits of outsourcing to low-cost producers in other nations because of the nature of the work.

Accepted Answer

The statement is false. Some health care tasks can be outsourced to low-cost producers in other nations, such as medical transcription, billing and coding, and radiology interpretation. However, other tasks, such as patient care, cannot be outsourced due to the need for physical presence and personalized interaction.

Quiz 1: Globalization