Question 1

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

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

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?

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

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?

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?

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?

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?

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

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

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?

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

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

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

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

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?

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

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?

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?

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

Accepted Answer

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

Quiz 1: Globalization