Question 1

What is "global capitalism"?
A) Capitalism that exists in more than one country.
B) Most countries are predominantly capitalist.
C) A few capitalist countries dominate the world economy.
D) Capitalism that is based primarily on international trade and investment.

Accepted Answer

B

Question 2

What are the three mechanisms that transmit recessions and expansions from one country to another?
A) Exports of goods, exports of services, and exports of currency.
B) International trade, international investment, and international finance.
C) Consumers, businesses, and governments.
D) The United Nations, the World Bank, and the International Labor Organization.

Accepted Answer

The three mechanisms that transmit recessions and expansions from one country to another are international trade, international investment, and international finance. These mechanisms can cause a ripple effect that can impact multiple countries and their economies. For example, a recession in one country can lead to decreased demand for imports from other countries, which can result in decreased exports and economic activity in those countries. Similarly, a surge in investment or finance can lead to increased economic activity and growth in multiple countries.

Question 3

If the United States is the most important market for Bolivian exports, then a recession in the United States is likely to
A) increase demand for goods imported from Bolivia.
B) lead to an economic expansion in Bolivia.
C) lead to an economic downturn in Bolivia.
D) have no effect on Bolivia's economy.

Accepted Answer

A recession in the United States is likely to decrease demand for imports, including Bolivian exports. This would lead to a decrease in demand for Bolivian goods and likely result in an economic downturn in Bolivia.

Question 4

Assume Toyota builds a new plant in Mississippi to produce the Prius. This is an example of
A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Accepted Answer

Building a new plant in another country is an example of international investment, as the company is investing in the production capacity of that country. It is not international trade because the cars produced are not being shipped across borders for sale, and it is not economic imperialism because Toyota is not taking control of the country's economy. Finally, it is not related to international finance because it does not involve financial transactions across borders.

Question 5

A resident of Canada purchases 1,000 shares of stock in Dell Computers. This is an example of
A) international trade.
B) international investment.
C) economic imperialism.
D) international finance.

Accepted Answer

The answer of A resident of Canada purchases 1,000 shares...

Question 6

How does a recession in the United States affect the level of foreign investment undertaken by American businesses?
A) Businesses tend to increase the level of foreign investment during a recession.
B) Businesses tend to decrease the level of foreign investment during a recession.
C) Businesses tend to maintain the same level of foreign investment over the business cycle.
D) It is against the law businesses to engage in foreign investment during a recession.

Accepted Answer

During a recession, businesses tend to decrease the level of foreign investment due to the uncertain economic conditions and lack of available funds. As a result, they focus on stabilizing their domestic operations.

Question 7

In general, what is the attitude of businesses toward foreign investments compared to domestic investment?
A) Businesses are more cautious about making foreign investments.
B) Businesses are more cautious about making domestic investment.
C) Businesses are equally cautious about all investments.
D) Businesses will engage either in foreign investment or domestic investment but not both.

Accepted Answer

Generally, businesses are more cautious about making foreign investments due to the increased risk involved in investing in unfamiliar markets, as well as factors such as legal and regulatory differences, cultural barriers, and exchange rate fluctuations. Domestic investment is seen as less risky and more predictable, as businesses are familiar with the market conditions and the business environment in their own country.

Question 8

A resident of Dubai buys $1,000,000 in U.S. government bonds. This is an example of
A) international investment.
B) international finance.
C) international trade.
D) international subcontracting.

Accepted Answer

The answer of A resident of Dubai buys $1,000,000 in...

Question 9

The global integration of the world economy means that
A) most industrial countries experience tend recessions at the same time.
B) a recession in one industrialized country will be offset by a boom in another country.
C) industrial countries are relatively immune from international financial instability.
D) most industrial countries now use the same currency.

Accepted Answer

The global integration of the world economy means that there is greater interdependence and interconnectedness among countries, particularly in the realm of trade and finance. This has led to an increase in synchronized business cycles, meaning that when one country experiences a recession, other industrialized countries are likely to experience a downturn as well.

Question 10

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect
A) U.S. imports of automobiles from Japan will increase.
B) U.S. imports of automobiles from Japan will decrease.
C) U.S. imports of automobiles from Japan will remain the same.
D) United States will import no automobiles from Japan.

Accepted Answer

During a recession, consumers tend to cut back on their spending and purchase fewer goods, including automobiles. Therefore, U.S. imports of automobiles from Japan are likely to decrease.

Question 11

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect
A) that aggregate demand in Japan will increase.
B) that aggregate demand in Japan will decrease.
C) that aggregate demand in Japan will remain the same.
D) that Japan will have no aggregate demand.

Accepted Answer

If there is a recession in the United States, the demand for automobiles will decrease, which will negatively affect the Japanese auto industry since they export a significant portion of their vehicles to the United States. As a result, the aggregate demand in Japan is likely to decrease.

Question 12

The conservative position on the global movement of financial capital is that
A) the rapid movement of financial capital into and out of a country can be destabilizing to the country's economy.
B) the free movement of financial capital from one country to another will ensure that it will be put to the most productive use.
C) the movement of financial capital out of the developed countries and into the developing countries will lead to greater inefficiency and lower productivity.
D) all international movement of financial capital should be regulated by the International Monetary Fund.

Accepted Answer

The conservative position typically emphasizes the benefits of free markets and the efficient allocation of resources, arguing that allowing financial capital to move freely across borders ensures it is used where it can be most productive.

Question 13

The progressive position on the global movement of financial capital is that
A) the rapid movement of financial capital into and out of a country can be destabilizing to the country's economy.
B) the free movement of financial capital from one country to another will ensure that it will be put to the most productive use.
C) the movement of financial capital out of the developed countries and into the developing countries will lead to greater inefficiency and lower productivity.
D) all international movement of financial capital should be regulated by the International Monetary Fund.

Accepted Answer

The progressive position on the global movement of financial capital is that the rapid and unregulated movement of financial capital can destabilize a country's economy. This can lead to currency and financial crises, devaluation of currencies, and unemployment. Therefore, some level of regulation or control is necessary to ensure stability and prevent crises.

Question 14

Conservatives point to the positive aspects of globalization including
A) the increase in the growth rate of the GDP of the global economy since 1970.
B) the increase in the growth rate of GDP per capita since 1970.
C) the increase in the profit rate of the 500 largest transnational corporations since 1970.
D) the increase in the growth rate of real global investment since 1970.

Accepted Answer

Globalization has contributed to the increase in the growth rate of the GDP of the global economy since 1970, as it has facilitated trade, investment, and economic integration across countries.

Question 15

Progressives point to the negative aspects of globalization including
A) the decrease in the growth rate of the GDP of the global economy since 1970.
B) the decrease in the growth rate of GDP per capita since 1970.
C) the increase in global inflation since 1970.
D) the decrease in the volume of global trade since 1970.

Accepted Answer

Progressives often highlight the negative aspects of globalization, such as the decrease in the growth rate of GDP per capita, which can indicate that the benefits of globalization are not evenly distributed among individuals.

Question 16

The wealth of individuals in all countries has been estimated at
A) $125 million
B) $125 billion
C) $125 trillion
D) $125 quadrillion

Accepted Answer

According to estimates from Credit Suisse, the total global wealth of individuals was approximately $125 trillion in 2019. Therefore, choice C is the correct answer.

Question 17

The world's richest 1% of households own ____________of the world's wealth.
A) 1%
B) 20%
C) 40%
D) 60%

Accepted Answer

The world's richest 1% of households own approximately 40% of the world's wealth. This statistic highlights the significant wealth inequality that exists globally.

Question 18

The poorest 50% of the world's population own ____________of the world's wealth.
A) 1%
B) 15%
C) 30%
D) 50%

Accepted Answer

The poorest 50% of the world's population own only 1% of the world's wealth, making choice A the correct answer. This staggering wealth inequality highlights the need for increased efforts towards reducing poverty and promoting economic equality.

Question 19

A key indicator of global warming is the increase in greenhouse gases such as
A) sodium chloride.
B) carbon dioxide.
C) helium.
D) sulfuric acid.

Accepted Answer

Carbon dioxide is a significant greenhouse gas that traps heat in the atmosphere, leading to global warming. Sodium chloride and helium are not greenhouse gases, and sulfuric acid is a secondary pollutant formed from other emissions.

Question 20

The term, "outsourcing" means
A) turning over part of a production process to an outside supplier often located in another country.
B) purchasing raw materials from one country to be used in a production process in another country.
C) purchasing finished products from another country.
D) a recreational activity involving locating the source of major rivers.

Accepted Answer

Outsourcing refers to the practice of turning over a part of a production process to an outside supplier, often located in another country. It can be done to reduce costs, improve efficiency, or gain access to specialized skills and technology.

Quiz 13: Globalization and the Spread of Instability

What is "global capitalism"?

What are the three mechanisms that transmit recessions and expansions from one country to another?

If the United States is the most important market for Bolivian exports, then a recession in the United States is likely to

Assume Toyota builds a new plant in Mississippi to produce the Prius. This is an example of

A resident of Canada purchases 1,000 shares of stock in Dell Computers. This is an example of

How does a recession in the United States affect the level of foreign investment undertaken by American businesses?

In general, what is the attitude of businesses toward foreign investments compared to domestic investment?

A resident of Dubai buys $1,000,000 in U.S. government bonds. This is an example of

The global integration of the world economy means that

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect

The United States imports approximately $45 billion in automobiles from Japan. If there is a recession in the United States, we can expect

The conservative position on the global movement of financial capital is that

The progressive position on the global movement of financial capital is that

Conservatives point to the positive aspects of globalization including

Progressives point to the negative aspects of globalization including

The wealth of individuals in all countries has been estimated at

The world's richest 1% of households own ____________of the world's wealth.

The poorest 50% of the world's population own ____________of the world's wealth.

A key indicator of global warming is the increase in greenhouse gases such as

The term, "outsourcing" means