Question 1

For foreign direct investment (FDI) to occur, a firm should primarily
A) conduct cross-border bartering with neighboring countries.
B) invest resources in business activities outside its home country.
C) export goods or services to consumers in another country.
D) import goods or services from producers in another country.
E) support strong barriers to international trade.

Accepted Answer

FDI involves a firm investing resources in business activities outside its home country, such as establishing operations or acquiring assets in another country.

Question 2

The main goal of GATT was to
A) limit foreign competition.
B) make loans to struggling nations.
C) increase domestic competition.
D) privatize state-owned organizations.
E) reduce trade barriers.

Accepted Answer

The General Agreement on Tariffs and Trade (GATT) was established to promote international trade by reducing or eliminating trade barriers such as tariffs and quotas.

Question 3

Which statement reflects the changing demographics of the global economy?
A) U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports.
B) The change in the position of the United States in terms of the share of world output is the result of the absolute decline in the health of the U.S. economy.
C) From 1960 to 2010, countries that experienced a large decrease in their share of world output include Japan, Thailand, Malaysia, Taiwan, and South Korea.
D) The United States is the only developed nation to see its relative standing in the share of world output slip.
E) Today, roughly half the globe-the centrally planned economies of the communist world-is off-limits to Western international businesses.

Accepted Answer

U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports.

Question 4

One result of the Uruguay Round was
A) increased trade and investment barriers.
B) excluding the trade of services from international trade.
C) transforming the World Trade Organization into GATT.
D) enhanced protection for patents, trademarks, and copyrights.
E) promoting the worldwide rise of communism.

Accepted Answer

The Uruguay Round led to the creation of the World Trade Organization (WTO) and included agreements that enhanced the protection of intellectual property rights, such as patents, trademarks, and copyrights.

Question 5

Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two countries. Silver Fire Electric is what type of enterprise?
A) state-owned
B) universal
C) private
D) multinational
E) public

Accepted Answer

A multinational enterprise is a company that has operations in more than one country.

Question 6

While the lowering of trade barriers made globalization of markets and production a theoretical possibility, what has made it a tangible reality?
A) the advances in communication, information processing, and transportation technologies
B) the rise of communism and the need for independent economies on a global scale
C) the increasing diversity in consumer tastes and preferences worldwide
D) the increasing differences in the material culture the world over
E) the decreasing significance of the World Trade Organization

Accepted Answer

Advances in communication, information processing, and transportation technologies have made it easier and more efficient to conduct business globally, thus making globalization a tangible reality.

Question 7

Why did many nations impose high tariffs on imports of manufactured goods prior to World War II?
A) to protect domestic industries from foreign competition
B) to prevent the occurrence of the Great Depression
C) to safeguard patents, copyrights, and trademarks
D) to promote the trade of services over the trade of manufactured goods
E) to deter any possible attempts to promote communism

Accepted Answer

Many nations imposed high tariffs on imports of manufactured goods to protect their domestic industries from foreign competition, ensuring that local businesses could thrive without being undercut by cheaper foreign products.

Question 8

What are mini-multinationals?
A) multinational firms from relatively small countries in terms of area
B) multinationals from the developing nations of the world
C) multinational firms that operate in only one foreign country
D) medium- and small-size multinationals
E) subsidiaries of large multinationals in foreign countries

Accepted Answer

Mini-multinationals refer to medium- and small-size multinational companies that operate internationally, often with fewer resources than large multinationals.

Question 9

The change in the United States' position as a dominant industrial power is characterized as a relative decline because it
A) is the direct result of an isolationism policy.
B) doesn't account for entrepreneurial activity.
C) actually increased compared to some other developed nations.
D) accounts for the production of goods and services.
E) reflects the faster economic growth of several other economies.

Accepted Answer

The relative decline refers to the fact that while the U.S. economy continues to grow, other economies have been growing at a faster rate, thus changing the U.S.'s relative position in the global economy.

Question 10

A positive economic change from 1960 to 2018 was seen in the
A) growth of the centrally planned economies of the communist world.
B) U.S. position in the world economy and world trade picture.
C) share of world output enjoyed by rich industrialized countries such as Great Britain, Germany, and France.
D) share of world output accounted for by developing nations.
E) prevalence of independent and self-contained national economies.

Accepted Answer

From 1960 to 2018, developing nations increased their share of world output, reflecting economic growth and development in these regions.

Question 11

Connor assured his foreign counterpart that the items would be shipped from St. Louis, Missouri, and arrive in about ten days to Lisbon, Portugal because the parts would stay in the same packing crate and be lifted directly from the truck onto the airplane rather than having to be repackaged. What innovation is Connor referring to?
A) logistics
B) communication
C) containerization
D) sustainability
E) customization

Accepted Answer

Connor is referring to containerization, which involves using standardized containers that can be easily transferred between different modes of transportation without repackaging.

Question 12

Gerald bought his son, David, a computer two years ago. Recently, he decided to buy his daughter, Julian, a computer of her own. When applying Moore's Law to the two-year gap between the purchase of the computers, it is most likely that
A) Gerald paid a higher price for Julian's computer.
B) David's computer will have a microprocessor with better power than that of Julian's.
C) both David's and Julian's computers would cost Gerald the same price.
D) the microprocessor in Julian's computer will be more advanced in terms of power than that of David's.
E) the power of the microprocessors, in both David and Julian's computers, would be the same.

Accepted Answer

Moore's Law suggests that the number of transistors on a microprocessor doubles approximately every two years, leading to more advanced and powerful processors over time. Therefore, Julian's computer is likely to have a more advanced microprocessor than David's.

Question 13

Kellen's Karpets is headquartered in Las Vegas, Nevada, and has production plants in Mexico and Indonesia. Kellen's Karpets is an example of
A) an acquisition.
B) a multinational enterprise.
C) a factor endowment.
D) a global trader.
E) a domestic company.

Accepted Answer

Kellen's Karpets operates production plants in multiple countries (Mexico and Indonesia) while being headquartered in the United States, which classifies it as a multinational enterprise.

Question 14

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the
A) rich industrialized nations of the world like Great Britain and Germany.
B) centrally planned economies of the communist world.
C) United States.
D) developing nations of the world such as China, India, and Brazil.
E) countries that are currently not members of the World Trade Organization.

Accepted Answer

Developing nations like China, India, and Brazil are experiencing rapid economic growth and industrialization, making them hotspots for future economic opportunities.

Question 15

Sharron purchased a computer for $500 in 2018. Compared to the $900 computer that she purchased in 2011, the new one seems better in terms of the price she has paid and the power of the microprocessor technology. This is best explained by
A) product liability.
B) property rights.
C) Moore's law.
D) purchasing power parity.
E) sustainable strategies.

Accepted Answer

Moore's law suggests that the power of microprocessors doubles approximately every two years, leading to more powerful and cheaper technology over time. This explains why Sharron's newer computer is better and cheaper than the older one.

Question 16

What country has seen a relative decline in its share of world output between 1960 and 2018?
A) United States
B) Brazil
C) Thailand
D) China
E) South Korea

Accepted Answer

The United States has seen a relative decline in its share of world output between 1960 and 2018.

Question 17

The stock of foreign direct investment refers to
A) the purchasing power associated with current investments.
B) the ability to leverage FDI when negotiating with a foreign entity.
C) the total cumulative value of foreign investments as a percentage of a country's GDP.
D) the value of foreign investment when accounting for tariffs and other government-imposed costs.
E) the number of foreign investments a company has compared to the number of domestic investments.

Accepted Answer

The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country, often expressed as a percentage of the country's GDP.

Question 18

What is implied by the fact that in today's marketplace, the volume of world trade has been growing faster than world GDP?
A) More companies are relying on domestic firms to obtain parts of their production process.
B) The economies of the world's nation-states are becoming less intertwined.
C) More companies are dispersing parts of their production process to locations around the globe.
D) The world has experienced a loss of overall wealth in the last two decades.
E) More countries are imposing trade barriers to minimize competition.

Accepted Answer

The fact that world trade is growing faster than world GDP implies that companies are increasingly globalizing their production processes, sourcing parts and services from various locations worldwide to optimize costs and efficiency.

Question 19

When trade barriers began to fall, what was the motivation for much of the foreign direct investment by non-U.S. firms?
A) desire to disperse production activities to optimal locations
B) need to suppress emerging economies such as China, India, and Brazil
C) demand for skilled workers in foreign nations
D) lack of adequate environmental regulations
E) establishment of multinational treaties

Accepted Answer

The motivation for much of the foreign direct investment by non-U.S. firms was to disperse production activities to optimal locations, taking advantage of lower costs, access to resources, and proximity to markets.

Question 20

Michelle, an Italian fashion designer, sells her merchandise by exporting it to retail stores in the United States, United Kingdom, and Brazil. According to this information, Michelle is participating in
A) foreign direct investment.
B) globalization of production.
C) international trade.
D) multinational enterprise.
E) outsourcing.

Accepted Answer

Michelle is participating in international trade as she is exporting her merchandise to retail stores in different countries.

Quiz 1: Globalization

For foreign direct investment (FDI) to occur, a firm should primarily

The main goal of GATT was to

Which statement reflects the changing demographics of the global economy?

One result of the Uruguay Round was

Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two countries. Silver Fire Electric is what type of enterprise?

While the lowering of trade barriers made globalization of markets and production a theoretical possibility, what has made it a tangible reality?

Why did many nations impose high tariffs on imports of manufactured goods prior to World War II?

What are mini-multinationals?

The change in the United States' position as a dominant industrial power is characterized as a relative decline because it

A positive economic change from 1960 to 2018 was seen in the

Gerald bought his son, David, a computer two years ago. Recently, he decided to buy his daughter, Julian, a computer of her own. When applying Moore's Law to the two-year gap between the purchase of the computers, it is most likely that

Kellen's Karpets is headquartered in Las Vegas, Nevada, and has production plants in Mexico and Indonesia. Kellen's Karpets is an example of

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the

Sharron purchased a computer for $500 in 2018. Compared to the $900 computer that she purchased in 2011, the new one seems better in terms of the price she has paid and the power of the microprocessor technology. This is best explained by

What country has seen a relative decline in its share of world output between 1960 and 2018?

The stock of foreign direct investment refers to

What is implied by the fact that in today's marketplace, the volume of world trade has been growing faster than world GDP?

When trade barriers began to fall, what was the motivation for much of the foreign direct investment by non-U.S. firms?

Michelle, an Italian fashion designer, sells her merchandise by exporting it to retail stores in the United States, United Kingdom, and Brazil. According to this information, Michelle is participating in