Chapter1 Answ
Chapter1 Answ
Chapter1 Answ
Globalization
False
2. By offering the same basic product worldwide, firms help to create a global market.
True
False
3. A company has to be the size of a multinational giant to facilitate, and benefit from,
the globalization of markets.
True
False
False
False
6. As firms follow each other around the world, they bring with them many of the assets
that served them well in other national markets. Thus, greater diversity replaces
uniformity.
True
False
False
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8. 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.
True
False
9. The International Monetary Fund and the World Bank were both created in 1944 by
44 nations that met at Bretton Woods, New Hampshire.
True
False
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.
True
False
11. The IMF is less controversial than its sister institution, the World Bank.
True
False
12. In return for loans, the IMF requires nation-states to adopt specific economic policies
aimed at returning their troubled economies to stability and growth.
True
False
13. Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
True
False
14. 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.
True
False
15. The Uruguay Round, held under the umbrella of GATT, extended GATT to cover
services as well as manufactured goods.
True
False
16. The lowering of trade and investment barriers allows firms to base production at the
optimal location for that activity.
True
False
17. As a result of international trade, the economies of the worlds nation-states are
becoming less intertwined.
True
False
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18. 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 the attack of foreign competitors.
True
False
False
False
21. The real costs of information processing and communication have fallen dramatically
in the past two decades.
True
False
22. The Internet has been a major force facilitating international trade in services.
True
False
23. Countries that markedly increased their share of world output from 1960 to 2010
included Germany, France, and the United Kingdom.
True
False
24. The United States accounted for a significantly larger share of the world economy in
2011 than it did in the 1960's.
True
False
25. 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.
True
False
26. The stock of foreign direct investment refers to the total cumulative value of foreign
investments in a country.
True
False
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27. Throughout the 1990s, the amount of investment directed at both developed and
developing nations increased dramatically
True
False
28. Among developing nations, the largest recipient of foreign direct investment has
been China.
True
False
29. Although most international trade and investment is still conducted by large firms,
many medium-size and small businesses are becoming increasingly involved in
international trade and investment.
True
False
30. The rise of the Internet is increasing the barriers that small firms face in building
international sales.
True
False
31. Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic policies and free market economies.
True
False
32. In the past quarter century, the volume of cross-border trade and investment has
been growing less rapidly than global output.
True
False
33. One concern frequently voiced by globalization opponents is that falling barriers to
international trade destroy manufacturing jobs in wealthy advanced economies such
as the United States and western Europe.
True
False
34. It is possible that economic growth in developed nations has offset the fall in the
share of national income enjoyed by unskilled workers, raising their living standards.
True
False
False
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36. In general, as countries get richer, they enact tougher environmental and labor
regulations.
True
False
37. Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by
pursuing retaliatory trade policies rather than free trade policies.
True
False
False
39. Despite all the talk about the emerging global village, differences between countries
such as cultures and political systems are very profound and enduring.
True
False
40. Differences among countries require that an international business vary its practices
country by country.
True
False
A.
B.
C.
D.
E.
Forward integration
Mass customization
Globalization
Commercialization
Vertical integration
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43. Which of the following statements is true regarding the globalization of markets?
A.
B.
C.
D.
E.
Microprocessors
Fast food like hamburgers
Clothes and accessories
Bank and other personal services
Household furnishings
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
46. Which of the following statements best supports the claim that greater uniformity
replaces diversity in the context of global markets?
A.
B.
C.
D.
E.
regulatory control
diversity
homogeneity
administrative barrier
communism
48. The _____ refers to the sourcing of goods and services from locations around the
globe to take advantage of national differences in the cost and quality of factors such
as labor, energy, land, and capital.
A.
B.
C.
D.
E.
globalization of markets
augmentation of products
amplification of production
globalization of production
capitalization of markets
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A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India for
the cutting process.
B. Evan Swan, a U.S. based fashion designer, is planning to open a flagship store in
China to serve the Asian market.
C. Uncle Crab, a UK fast food chain, has been serving customers worldwide through
its franchises.
D. Silver Unicorn Inc. uses sales personnel from the respective host country to sell its
products and services.
E. Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the
tastes of its American and Australian customers.
50. West Electronic Corporation sources goods and services for its electronics products
from different locations around the globe in an attempt to take advantage of
differences in the cost and quality of labor and land. This practice demonstrates the:
A.
globalization of production.
B.
localization of markets.
C. increasing differences in tastes and preferences of consumers across the world.
D.
nationalization of private enterprises.
E.
rise of communism throughout the globe.
51. Which of the following statements is most likely to be true of outsourcing?
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A.
B.
C.
D.
E.
outsourcing.
job sharing.
job rotation.
franchising.
apprenticeship.
A.
B.
C.
D.
E.
accounting activities
manufacturing activities
healthcare services
educational activities
consulting services
54. Which of the following reasons has made outsourcing of service activities to low-cost
producers in other nations possible?
A.
North American Free Trade Agreement
B. Commonwealth of Independent States Free Trade Agreement
C.
Kyoto protocol
D.
General Agreement on Tariffs and Trade
E. Agreement on Trade-Related Aspects of Intellectual Property Rights
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A. It increases barriers to the free flow of goods and investment across national
borders.
B. It only provides assistance to developing nations and completely ignores the
developed nations.
C. It is not powerful enough to ensure that the nation-states adhere to the rules laid
down in trade treaties.
D. It promotes the rise of communism across the globe.
E. It usurps the sovereignty of nation-states by telling governments what economic
policies they must adopt.
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60. The _____ was established in 1945 by 51 countries committed to preserving peace
through international cooperation and collective security.
A.
B.
C.
D.
E.
Greenpeace organization
Amnesty International
League of Nations
United Nations
G-20
61. The _____ is the less controversial sister institution of the IMF which was created
along with the IMF in 1944.
A.
B.
C.
D.
E.
G-20
International Court of Justice
League of Nations
World Trade Organization
World Bank
62. According to the UN Charter, one of the four purposes of the UN is to:
A.
B.
C.
D.
E.
64. The _____ was originally established in 1999 to formulate a coordinated policy
response to financial crises in developing nations.
A.
B.
C.
D.
E.
United Nations
G-20
World Trade Organization
International Court of Justice
World Bank
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A.
Rise of communism across the globe
B. Increasing nationalization of private organization
C. Increasing diversity in the tastes and preferences of consumers in different nations
D.
Increasing trade regulations across the globe
E. Dramatic developments in recent years in information processing and other
technologies
67. Which of the following best exemplifies foreign direct investment (FDI)?
A. Pure Pearls, a jewelry store in the U.S., imports harvested pearls from Indonesia,
Philippines, and Australia.
B. Chivalry, a U.S. based phone manufacturing company, has set up its own assembly
plant in Japan to cater to the needs of the Asian market.
C. Delicate Love, a reputed florist company in Holland, exports tulips and roses
throughout the globe.
D. Samantha started an Italian restaurant in her home country, the United States,
after she took cooking lessons from a reputed chef in Italy.
E. Yin and Yang Inc., a Chinese firm, supplies buttons and zips to major denim brands
in the UK.
68. Michelle, an Italian fashion designer,sells her merchandise by exporting them to the
U.S., UK, and Brazil. According to this information, Michelle is most likely involved in:
A.
B.
C.
D.
E.
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69. If in the present time, an International company decides to do business with the
former Communist nations of Europe and Asia it would most likely benefit from the:
A.
B.
C.
D.
E.
71. Gem Globe, an American company, has invested substantial capital in precious
stones mining activities outside the United States. This practice is referred to as:
A.
B.
C.
D.
E.
unrelated diversification.
foreign direct investment.
cross-border bartering.
organizational divestment.
international cartel.
72. When a firm invests resources in business activities outside its home country, it is
referred to as:
A.
B.
C.
D.
E.
foreign exchange.
foreign divestiture.
speculative investment.
foreign direct investment.
cross-border cartel.
73. The motive behind the high tariffs imposed by nations on imports of manufactured
goods, prior to World War II, was to:
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74. The advanced industrial nations of the West committed themselves after World War II
to removing barriers to the free flow of goods, services, and capital between nations.
This goal was enshrined in the:
A.
B.
C.
D.
E.
75. Which of the following reasons contributed to the Great Depression of the 1930s?
A.
B.
C.
D.
E.
76. Which of the following organizations was established at the 1993 Uruguay Round?
A.
B.
C.
D.
E.
A.
increased the trade and investment barriers.
B. excluded the trade of services from international trade.
C. transformed the World Trade Organization into the GATT.
D. provided enhanced protection for patents, trademarks, and copyrights.
E.
promoted the worldwide rise of communism.
78. Which of the following is a part of the agenda of the Doha Round of talks launched by
the WTO?
A.
Limiting the use of antidumping laws
B.
Abolishing the International Monetary Fund
C. Increasing tariffs on industrial goods, services, and agricultural products
D. Persuading member governments to cut defense spending
E. Establishing GATT as a replacement for the WTO
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79. Which of the following would be the biggest gain for the world's poor nations from the
2001 Doha WTO talks?
A.
B.
C.
D.
A.
B.
C.
D.
E.
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
83. While the lowering of trade barriers made globalization of markets and production a
theoretical possibility, which of the following has made it a tangible reality?
A.
B.
C.
D.
E.
Bell's law
Murphy's law
Moore's law
Ohm's law
Engel's law
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87. Richard has recently purchased a computer for $600. Compared to the $900
computer which he had purchased way back in 2010, the new one seems to be more
efficient in terms of the price he has paid and the power of the microprocessor
technology. This phenomenon is best explained by:
A.
B.
C.
D.
E.
88. Which of the following statements is true about the Internet and World Wide Web?
A.
The advent of containerization
B. The use of the Internet and services such as Skype
C. National differences in culture, consumer preferences, and business practices
D.
Privatizing state-owned enterprises
E.
The collapse of communism
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
91. Since 1980, the world's containership fleet has more than quadrupled, reflecting in
part the:
A.
growing volume of international trade.
B.
decreasing productivity of labor.
C.
rising costs of containerization.
D.
increasing transportation costs.
E. decreasing employment opportunities across the globe.
92. The _____ has been a major force facilitating international trade in services.
A.
advent of containerization
B.
development of commercial jet aircraft
C. retaliatory trade policies toward international trade in goods
D.
decline in the U.S. share of world output
E.
advent of the Internet
93. Which of the following statements is true about the implications of technological
innovations for the globalization of markets?
A.
Increasing U.S. share of world output
B. Large U.S. entrepreneurial firms dominating the international business scene
C. Increasing U.S. dominance in the world economy and world trade picture
D. Most of the nations being governed by centrally planned economies of the
communist world
E. Rapid rise in the share of world output accounted for by developing nations such as
China and India
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95. _____ was the world's most dominant industrial power in the early 1960s.
A.
B.
C.
D.
E.
India
Brazil
Spain
The United States
China
96. Which of the following countries has seen a relative decline in it's share of world
output between 1960 and 2010?
A.
B.
C.
D.
E.
97. Which of the following statements is true about 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 U.S. 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 globethe centrally planned economies of the communist
worldis off-limits to Western international businesses.
98. Which of the following has seen a positive change from 1960 to 2010?
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99. In the context of the changing demographics of the global economy, which of the
following has seen a decline?
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.
101 The motivation for much of the foreign direct investment by non-U.S. firms was the
.
desire to:
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103 Which of the following statements is true about the changing foreign direct
.
investment picture of the global economy?
A. Throughout the 1990s, the amount of investment directed at both developed and
developing nations decreased dramatically.
B. There has been a fall in the share of FDI stock accounted for by developing nations
reflecting a declining trend for firms from these countries to invest outside their
borders.
C. Among developing nations, the lowest recipient of foreign direct investment has
been China.
D. The share of FDI stock accounted for by U.S. firms has been drastically increasing
from 1980s.
E. The sustained flow of foreign investment into developing nations is an important
stimulus for economic growth in those countries.
104 The sustained flow of foreign investment into developing nations:
.
A. has resulted in the rise of communism in those countries.
B.
has been increasing since the 1980s.
C. is aimed at Western powers building political influence in those regions.
D. is detrimental to the economic growth in those countries.
E. has resulted in a declining trend for firms from these countries to invest outside
their borders.
105 _____ has experienced a decline in the share of FDI stock between 1980 and 2010.
.
A.
B.
C.
D.
E.
India
The United States
France
China
South Korea
106 Silver Fire Electric Inc., a U.S. company, has productive activities in more than two
.
countries. As a result, it would be most appropriate to refer to Silver Fire Electric as
a(n) _____ enterprise.
A.
B.
C.
D.
E.
regional
pan-American
unlimited
multinational
public
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107 A notable trend in the demographics of the multinational enterprise since the 1960s
.
is the:
110 Which of the following statements is true about the trends in the changing nature of
.
multinational enterprises?
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111 Universal Lingo, a UK based language translation company employing just 65 people
.
worldwide, has an annual turnover of $1.5 million. In this context, Universal Lingo is
most likely to be classified as a(n):
A.
B.
C.
D.
E.
112 In the present times, many of the former Communist nations of Europe and Asia:
.
A. are closed for Western international businesses.
B.
are committed to democratic politics.
C.
are against free market economics.
D. have prohibited the use of the Internet by small multinationals.
E.
have highly developed economies.
113 Which of the following statements is true about the former communist nations of
.
East Europe and central Asia?
A.
B.
C.
D.
E.
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115 Which of the following statements is true about the implications of revolutions
.
occurring in China for international businesses?
A. National economies are becoming less integrated into a single and interdependent
economic system.
B. The number of nations joining the ranks of the developed world has reduced.
C. Countries have extensively adopted liberal economic policies.
D. There are fewer instances of state-owned businesses privatized and markets being
opened to more competition.
E. The world is currently moving toward an economic system that is more
unfavorable for international business.
118 Which of the following statements is true about the general implications
.
of globalization?
A.
Globalization is inevitable.
B. From a purely economic perspective, globalization is all good.
C. Globalization has no negative impacts on the economies of the developed world.
D. Globalization has reduced the risks associated with global financial contagion.
E. As a result of globalization, a severe crisis in one region of the world can affect the
entire globe.
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119 An argument in support of the falling barriers to international trade and investment is
.
that the falling barriers:
121 Which of the following statements is true about the implications of globalization on
.
developing countries?
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123 Supporters of globalization insist that dislocation in the form of lost jobs is a trade-off
.
that will ultimately lead to the economy being better off. Which of the following is
being justified in this case?
A.
B.
C.
D.
E.
124 Which of the following must be true if the critics of globalization are correct?
.
A. The share of national income received by labor, as opposed to the share received
by the owners of capital should have increased in advanced nations.
B. A decline in the labors share of the economic pie means lower living standards.
C. The decline in labors share of national income is due to improvement in
production technology and productivity.
D. Decline in unskilled wage rates is due to the shift within advanced economies
toward jobs that do not require significant education and skills.
E. The real labor compensation has expanded in most developed nations since the
1980s.
125 Globalization critics argue that the decline in unskilled wage rates in advanced
.
economies is due to the:
A. wages for skilled workers being bid up by the labor market and the wages for
unskilled workers being discounted.
B. decrease in the outsourcing of low-wage manufacturing jobs offshore and a
corresponding increase in demand for unskilled workers.
C. shift within advanced economies toward jobs where the only qualification is
the willingness to turn up for work every day.
D. increasing wage gap between developing and developed nations.
E. shortage of unskilled workers and an excess supply of highly skilled workers.
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129 Which of the following is the most appropriate solution to the problem of rising
.
carbon dioxide emissions in developed economies?
A. Roll back the trade liberalization efforts that have fostered economic growth and
globalization.
B. Tie free trade agreements to the implementation of fewer environmental and labor
laws in less developed countries.
C. Get the nations of the world to agree to policies designed to limit pollutant
emissions.
D. Increase the export of low-wage manufacturing jobs to developing nations
E. Restrict international trade and investment only to services.
130 A concern voiced by critics of globalization is that todays increasingly
.
interdependent global economy shifts economic power toward:
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A.
Commitment to democratic government
B.
Rapidly expanding population
C. Implementation of the economic policies that are based on free market economics
D.
Tough labor regulations
E.
Low barriers to foreign direct investment
134 Free trade alone, some argue, is a necessary but not sufficient prerequisite to help
.
the worlds poorest countries bootstrap themselves out of poverty. They also
recommend:
A.
B.
C.
D.
E.
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135 The minimum that a firm has to do to engage in international business is to:
.
A. export or import products from other countries.
B. invest directly in operations in another country.
C. establish joint ventures or strategic alliances with companies in other countries.
D. export low-wage manufacturing jobs to companies in other countries.
E. develop franchises and subsidiaries in other countries.
136 Ryan is the executive general manager of a U.S. multinational and Jacob is a
.
manager in a similar position, but works for another U.S. company that operates only
in it's home country. In this context, which of the following business functions will be
most typically exclusive to Ryan?
A.
Marketing a product or service
B. Maintaining healthy relations with the U.S. government
C.
Planning on a business strategy
D. Adhering to the labor and environmental standards
E. Choosing an appropriate mode for entering a particular foreign country
Essay Questions
137 What is globalization? How do global companies such as IKEA, Starbucks, and
.
McDonald's facilitate the creation of a global market?
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139 Briefly trace the history of the G20 and describe its current role in international
.
business.
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141 What are the implications of the Uruguay Round held under the umbrella of GATT for
.
international business?
142 What is a multinational enterprise? What have been the two most notable trends in
.
multinational enterprises since the 1960s?
143 In the context of international trade and investment, describe how the former
.
Communist nations of Europe and Asia have been changing.
1-31
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145 Discuss the arguments that are for and against globalization regarding jobs and
.
income.
146 Discuss the concerns voiced by critics of globalization regarding labor policies and
.
environment.
1-32
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
147 What are the various reasons for economic stagnation in many of the worlds poorest
.
countries?
148 Why are supranational organizations, such as the World Trade Organization and the
.
United Nations, criticized?
149 What are some of the challenges faced by managers of an international business?
.
1-33
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1.
(p. 7)
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: Introduction
2.
By offering the same basic product worldwide, firms help to create a global
market.
TRUE
Consumer products such as Citigroup credit cards, Coca-Cola soft drinks, video
games, McDonalds hamburgers, Starbucks coffee, and IKEA furniture are
frequently held up as prototypical examples of this trend. The firms that produce
these products are more than just benefactors of this trend; they are also
facilitators of it. By offering the same basic product worldwide, they help to create
a global market.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-35
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
3.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
4.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
5.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-36
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
6.
As firms follow each other around the world, they bring with them many of the
assets that served them well in other national markets. Thus, greater diversity
replaces uniformity.
FALSE
As firms follow each other around the world, they bring with them many of the
assets that served them well in other national markets, creating some
homogeneity across markets. Thus, greater uniformity replaces diversity.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
7.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
8.
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.
TRUE
Over the past half century, a number of important global institutions have been
created to help perform these functions, including 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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
1-37
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
9.
The International Monetary Fund and the World Bank were both created in 1944 by
44 nations that met at Bretton Woods, New Hampshire.
TRUE
The International Monetary Fund and the World Bank were both created in 1944 by
44 nations that met at Bretton Woods, New Hampshire.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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.
FALSE
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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
11.
The IMF is less controversial than its sister institution, the World Bank.
FALSE
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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
1-38
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
12.
In return for loans, the IMF requires nation-states to adopt specific economic
policies aimed at returning their troubled economies to stability and growth.
TRUE
IMF loans come with strings attached, however; in return for loans, the IMF
requires nation-states to adopt specific economic policies aimed at returning their
troubled economies to stability and growth.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
13.
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
TRUE
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
14.
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.
FALSE
After World War II, the advanced nations of the West committed themselves to
removing barriers to the free flow of goods, services, and capital between nations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
1-39
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
15.
The Uruguay Round, held under the umbrella of GATT, extended GATT to cover
services as well as manufactured goods.
TRUE
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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
16.
The lowering of trade and investment barriers allows firms to base production at
the optimal location for that activity.
TRUE
The lowering of trade and investment barriers allows firms to base production at
the optimal location for that activity.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
17.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
1-40
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
18.
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 the attack of foreign competitors.
FALSE
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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
19.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
20.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
1-41
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
21.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
22.
The Internet has been a major force facilitating international trade in services.
TRUE
The Internet has been a major force facilitating international trade in services.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
23.
Countries that markedly increased their share of world output from 1960 to 2010
included Germany, France, and the United Kingdom.
FALSE
Countries that markedly increased their share of world output included Japan,
Thailand, Malaysia, Taiwan, and South Korea.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-42
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
24.
The United States accounted for a significantly larger share of the world economy
in 2011 than it did in the 1960's.
FALSE
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 8.1 percent by 2011, behind that of China.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
25.
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.
FALSE
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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
26.
The stock of foreign direct investment refers to the total cumulative value of
foreign investments in a country.
TRUE
The stock of foreign direct investment refers to the total cumulative value of
foreign investments in a country.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-43
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
27.
Throughout the 1990s, the amount of investment directed at both developed and
developing nations increased dramatically
TRUE
Throughout the 1990s, the amount of investment directed at both developed and
developing nations increased dramatically
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
28.
Among developing nations, the largest recipient of foreign direct investment has
been China.
TRUE
Among developing nations, the largest recipient of foreign direct investment has
been China.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
29.
Although most international trade and investment is still conducted by large firms,
many medium-size and small businesses are becoming increasingly involved in
international trade and investment.
TRUE
Although most international trade and investment is still conducted by large firms,
many medium-size and small businesses are becoming increasingly involved in
international trade and investment. The rise of the Internet is lowering the barriers
that small firms face in building international sales.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-44
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
30.
The rise of the Internet is increasing the barriers that small firms face in building
international sales.
FALSE
The rise of the Internet is lowering the barriers that small firms face in building
international sales.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
31.
Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic policies and free market economies.
TRUE
Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic policies and free market economies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
32.
In the past quarter century, the volume of cross-border trade and investment has
been growing less rapidly than global output.
FALSE
The volume of cross-border trade and investment has been growing more rapidly
than global output, indicating that national economies are becoming more closely
integrated into a single, interdependent, global economic system.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-45
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
33.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
34.
It is possible that economic growth in developed nations has offset the fall in the
share of national income enjoyed by unskilled workers, raising their living
standards.
TRUE
It is possible that economic growth in developed nations has offset the fall in the
share of national income enjoyed by unskilled workers, raising their living
standards.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
35.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
1-46
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
36.
In general, as countries get richer, they enact tougher environmental and labor
regulations.
TRUE
Supporters of free trade and greater globalization argue that tougher
environmental regulations and stricter labor standards go hand in hand with
economic progress. In general, as countries get richer, they enact tougher
environmental and labor regulations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
37.
Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by
pursuing retaliatory trade policies rather than free trade policies.
FALSE
Free trade is a necessary prerequisite along with large-scale debt relief to help
HIPCs bootstrap themselves out of poverty.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
38.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
1-47
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
39.
Despite all the talk about the emerging global village, differences between
countries such as cultures and political systems are very profound and enduring.
TRUE
Despite all the talk about the emerging global village, differences such as cultures
and political systems between countries are very profound and enduring.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
40.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
1-48
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
41.
A.
B.
C.
D.
E.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: Introduction
42.
_____ refers to the shift toward a more integrated and interdependent world
economy.
A.
B.
C.
D.
E.
Forward integration
Mass customization
Globalization
Commercialization
Vertical integration
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-49
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
43.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-50
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
44.
45.
Which of the following is most likely to be the best suited product for a global
market?
A.
B.
C.
D.
E.
Microprocessors
Fast food like hamburgers
Clothes and accessories
Bank and other personal services
Household furnishings
The most global markets currently are not markets for consumer products, but
markets for industrial goods and materials that serve a universal need the world
over.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-51
2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
46.
Which of the following statements best supports the claim that greater uniformity
replaces diversity in the context of global markets?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
47.
A.
B.
C.
D.
E.
regulatory control
diversity
homogeneity
administrative barrier
communism
As firms follow each other around the world, they bring with them many of the
assets that served them well in other national marketstheir products, operating
strategies, marketing strategies, and brand namescreating some homogeneity
across markets.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-52
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
48.
The _____ refers to the sourcing of goods and services from locations around the
globe to take advantage of national differences in the cost and quality of factors
such as labor, energy, land, and capital.
A.
B.
C.
D.
E.
globalization of markets
augmentation of products
amplification of production
globalization of production
capitalization of markets
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost
and quality of factors of production.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
49.
A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India
for the cutting process.
B. Evan Swan, a U.S. based fashion designer, is planning to open a flagship store
in China to serve the Asian market.
C. Uncle Crab, a UK fast food chain, has been serving customers worldwide
through its franchises.
D. Silver Unicorn Inc. uses sales personnel from the respective host country to sell
its products and services.
E. Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the
tastes of its American and Australian customers.
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost
and quality of factors of production (such as labor, energy, land, and capital).
1-53
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
50.
West Electronic Corporation sources goods and services for its electronics products
from different locations around the globe in an attempt to take advantage of
differences in the cost and quality of labor and land. This practice
demonstrates the:
A.
globalization of production.
B.
localization of markets.
C. increasing differences in tastes and preferences of consumers across the world.
D.
nationalization of private enterprises.
E.
rise of communism throughout the globe.
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost
and quality of factors of production.
51.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-54
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
52.
A.
B.
C.
D.
E.
outsourcing.
job sharing.
job rotation.
franchising.
apprenticeship.
Outsourcing refers to the sourcing of goods and services from locations around the
globe to take advantage of national differences in the cost and quality of factors of
production or services. By outsourcing, companies hope to lower their overall cost
structure or improve the quality or functionality of their service offering, thereby
allowing them to compete more effectively.
53.
A.
B.
C.
D.
E.
accounting activities
manufacturing activities
healthcare services
educational activities
consulting services
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
1-55
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
54.
Which of the following reasons has made outsourcing of service activities to lowcost producers in other nations possible?
AACSB: Analytic
AACSB: Reflective thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
55.
A.
North American Free Trade Agreement
B. Commonwealth of Independent States Free Trade Agreement
C.
Kyoto protocol
D.
General Agreement on Tariffs and Trade
E. Agreement on Trade-Related Aspects of Intellectual Property Rights
The General Agreement on Tariffs and Trade (GATT) is an international treaty
whose functions included policing the world trading system and committing
signatories to lowering barriers to the free flow of goods across national borders. It
was later succeeded by the World Trade Organization (WTO).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
1-56
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
56.
A.
growing cultural homogeneity across markets.
B. increasing differences in the tastes and preferences of consumers in different
nations.
C. national differences in the cost and quality of factors such as labor, energy,
land, and capital.
D.
rise in communism the world over.
E.
increasing worldwide demand for unskilled workers.
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost
and quality of factors of production (such as labor, energy, land, and capital).
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
57.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
1-57
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
58.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
59.
A. It increases barriers to the free flow of goods and investment across national
borders.
B. It only provides assistance to developing nations and completely ignores the
developed nations.
C. It is not powerful enough to ensure that the nation-states adhere to the rules
laid down in trade treaties.
D.
It promotes the rise of communism across the globe.
E. It usurps the sovereignty of nation-states by telling governments what
economic policies they must adopt.
IMF loans come with strings attached. In return for loans, the IMF requires nationstates to adopt specific economic policies aimed at returning their troubled
economies to stability and growth. These requirements have sparked controversy.
Some critics maintain that by telling national governments what economic policies
they must adopt, the IMF is usurping the sovereignty of nation-states.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
60.
A.
B.
C.
D.
E.
Greenpeace organization
Amnesty International
League of Nations
United Nations
G-20
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
61.
The _____ is the less controversial sister institution of the IMF which was created
along with the IMF in 1944.
A.
B.
C.
D.
E.
G-20
International Court of Justice
League of Nations
World Trade Organization
World Bank
The International Monetary Fund and the World Bank were both created in 1944 by
44 nations that met at Bretton Woods, New Hampshire. The World Bank is the less
controversial of the two sister institutions.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
62.
A.
be a center for harmonizing the actions of nations.
B.
encourage member-nations to increase trade barriers.
C. provide interest-free loans to poor countries to implement infrastructure
projects.
D. promote the creation of regional free trade agreements.
E.
spread communism worldwide.
According to the UN charter, the UN has four purposes: to maintain international
peace and security, to develop friendly relations among nations, to cooperate in
solving international problems and in promoting respect for human rights, and to
be a center for harmonizing the actions of nations.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
63.
The G20 comprises the _____ of the 19 largest economies in the world, plus
representatives from the European Union and the European Central Bank.
A.
B.
C.
D.
E.
Established in 1999, the G20 comprises the finance ministers and central bank
governors of the 19 largest economies in the world, plus representatives from the
European Union and the European Central Bank.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
64.
A.
B.
C.
D.
E.
United Nations
G-20
World Trade Organization
International Court of Justice
World Bank
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
65.
A.
address the concerns for human rights in sweatshops.
B. formulate policies to counter hunger and poverty in underdeveloped nations of
the world.
C. provide a forum to launch a coordinated policy response to the global financial
crisis.
D. help create a unified action plan to counter the threat of global terrorism.
E. render judgments on patent disputes submitted to it by member-states.
In 2008 and 2009, the G20 became the forum through which major nations
attempted to launch a coordinated policy response to the global financial crisis
that started in America and then rapidly spread around the world, ushering in the
first serious global economic recession since 1981.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
66.
Which of the following is a macro factor underlying the trend toward greater
globalization?
A.
Rise of communism across the globe
B.
Increasing nationalization of private organization
C. Increasing diversity in the tastes and preferences of consumers in different
nations
D.
Increasing trade regulations across the globe
E. Dramatic developments in recent years in information processing and other
technologies
Two macro factors underlying the trend toward greater globalization are: 1) the
decline in barriers to the free flow of goods, services, and capital that has occurred
since the end of World War II, and 2) technological change, particularly the
dramatic developments in recent years in communication, information processing,
and transportation technologies.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
67.
A. Pure Pearls, a jewelry store in the U.S., imports harvested pearls from
Indonesia, Philippines, and Australia.
B. Chivalry, a U.S. based phone manufacturing company, has set up its
own assembly plant in Japan to cater to the needs of the Asian market.
C. Delicate Love, a reputed florist company in Holland, exports tulips and roses
throughout the globe.
D. Samantha started an Italian restaurant in her home country, the United States,
after she took cooking lessons from a reputed chef in Italy.
E. Yin and Yang Inc., a Chinese firm, supplies buttons and zips to major denim
brands in the UK.
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
68.
A.
B.
C.
D.
E.
69.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-63
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
70.
A.
B.
C.
D.
E.
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
71.
A.
B.
C.
D.
E.
unrelated diversification.
foreign direct investment.
cross-border bartering.
organizational divestment.
international cartel.
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
72.
When a firm invests resources in business activities outside its home country, it is
referred to as:
A.
B.
C.
D.
E.
foreign exchange.
foreign divestiture.
speculative investment.
foreign direct investment.
cross-border cartel.
Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
73.
The motive behind the high tariffs imposed by nations on imports of manufactured
goods, prior to World War II, was to:
A.
deter any possible attempts to promote communism.
B. protect domestic industries from foreign competition.
C.
prevent the occurrence of the Great Depression.
D.
safeguard patents, copyrights, and trademarks.
E. promote the trade of services over the trade of manufactured goods.
During the 1920s and 30s many of the world's nation-states erected formidable
barriers to international trade and foreign direct investment. Many of the barriers
to international trade took the form of high tariffs on imports of manufactured
goods. The typical aim of such tariffs was to protect domestic industries from
foreign competition.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
74.
The advanced industrial nations of the West committed themselves after World
War II to removing barriers to the free flow of goods, services, and capital between
nations. This goal was enshrined in the:
A.
B.
C.
D.
E.
The advanced industrial nations of the West committed themselves after World
War II to removing barriers to the free flow of goods, services, and capital between
nations. This goal was enshrined in the General Agreement on Tariffs and Trade
(GATT).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
75.
Which of the following reasons contributed to the Great Depression of the 1930s?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
76.
Which of the following organizations was established at the 1993 Uruguay Round?
A.
B.
C.
D.
E.
The Uruguay Round established the World Trade Organization to police the
international trading system.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
77.
A.
increased the trade and investment barriers.
B.
excluded the trade of services from international trade.
C. transformed the World Trade Organization into the GATT.
D. provided enhanced protection for patents, trademarks, and copyrights.
E.
promoted the worldwide rise of communism.
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.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
78.
Which of the following is a part of the agenda of the Doha Round of talks launched
by the WTO?
A.
Limiting the use of antidumping laws
B.
Abolishing the International Monetary Fund
C. Increasing tariffs on industrial goods, services, and agricultural products
D. Persuading member governments to cut defense spending
E.
Establishing GATT as a replacement for the WTO
The Doha agenda included cutting tariffs on industrial goods, services, and
agricultural products; phasing out subsidies to agricultural producers; reducing
barriers to cross-border investment; and limiting the use of antidumping laws.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
79.
Which of the following would be the biggest gain for the world's poor nations from
the 2001 Doha WTO talks?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
80.
A.
protects domestic industries from foreign competition.
B.
was not an agenda of the Uruguay Round.
C. allows firms to base production at optimal locations outside their home country.
D.
creates an unfavorable environment for FDI.
E.
caused the Great depression of the 1930s.
The lowering of trade and investment barriers allows firms to base production at
the optimal location for that activity.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
81.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
1-69
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
82.
Which of the following has been declining in the developing nations of the
world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and
Brazil ?
A.
B.
C.
D.
E.
In 2010, firms based in developing nations accounted for 15.3 percent of the stock
of foreign direct investment, up from only 1.1 percent in 1980. Firms based in
Hong Kong, South Korea, Singapore, Taiwan, India, and mainland China accounted
for much of this investment.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
83.
While the lowering of trade barriers made globalization of markets and production
a theoretical possibility, which of the following has made it a tangible reality?
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
84.
Gerald gifted his son, David, a computer two years ago. Recently, he decided to
gift his daughter, Julian, a computer of her own. In the context of the two year gap
between the purchase of both the computers and Moore's law, 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.
The cost of microprocessors continues to fall, while their power increases (a
phenomenon known as Moores law , which predicts that the power of
microprocessor technology doubles and its cost of production falls in half every 18
months).
85.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
1-71
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
86.
_____ predicts that the power of microprocessor technology doubles and the cost of
production falls every 18 months.
A.
B.
C.
D.
E.
Bell's law
Murphy's law
Moore's law
Ohm's law
Engel's law
Moore's law predicts that the power of microprocessor technology doubles and the
cost of production falls every 18 months.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
87.
Richard has recently purchased a computer for $600. Compared to the $900
computer which he had purchased way back in 2010, the new one seems to be
more efficient in terms of the price he has paid and the power of the
microprocessor technology. This phenomenon is best explained by:
A.
B.
C.
D.
E.
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
88.
Which of the following statements is true about the Internet and World Wide Web?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
89.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
90.
Which of the following has been detrimental to the globalization of markets and
production?
A.
The advent of containerization
B.
The use of the Internet and services such as Skype
C. National differences in culture, consumer preferences, and business practices
D.
Privatizing state-owned enterprises
E.
The collapse of communism
While modern communication and transportation technologies are ushering in the
global village, significant national differences remain in culture, consumer
preferences, and business practices. A firm that ignores differences between
countries does so at its peril.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
91.
Since 1980, the world's containership fleet has more than quadrupled, reflecting in
part the:
A.
B.
C.
D.
E.
Since 1980, the world's containership fleet has more than quadrupled, reflecting in
part the growing volume of international trade and in part the switch to this mode
of transportation.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
92.
The _____ has been a major force facilitating international trade in services.
A.
B.
C.
D.
E.
advent of containerization
development of commercial jet aircraft
retaliatory trade policies toward international trade in goods
decline in the U.S. share of world output
advent of the Internet
The Internet has been a major force facilitating international trade in services.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
93.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
94.
A.
Increasing U.S. share of world output
B. Large U.S. entrepreneurial firms dominating the international business scene
C. Increasing U.S. dominance in the world economy and world trade picture
D. Most of the nations being governed by centrally planned economies of the
communist world
E. Rapid rise in the share of world output accounted for by developing nations
such as China and India
As emerging economies such as China, India, and Brazil continue to grow, a further
relative decline in the share of world output and world exports accounted for by
the United States and other long-established developed nations seems likely.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
95.
_____ was the world's most dominant industrial power in the early 1960s.
A.
B.
C.
D.
E.
India
Brazil
Spain
The United States
China
In the early 1960s, the United States was still by far the world's dominant
industrial power.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
96.
Which of the following countries has seen a relative decline in it's share of world
output between 1960 and 2010?
A.
B.
C.
D.
E.
From 1960 to 2010, Chinas share of world output increased from a trivial amount
to 9.4 percent, making it the worlds second largest economy. Other countries that
markedly increased their share of world output included Japan, Thailand, Malaysia,
Taiwan, and South Korea.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
97.
Which of the following statements is true about 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 U.S. 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 globethe centrally planned economies of the
communist worldis off-limits to Western international businesses.
Over the past 30 years, U.S. dominance in export markets has waned as Japan,
Germany, and a number of newly industrialized countries such as South Korea and
China have taken a larger share of world exports.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
98.
Which of the following has seen a positive change from 1960 to 2010?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
99.
In the context of the changing demographics of the global economy, which of the
following has seen a decline?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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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.
Many of tomorrow's economic opportunities may be found in the developing
nations of the world, and many of tomorrow's most capable competitors will
probably also emerge from these regions.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
101. The motivation for much of the foreign direct investment by non-U.S. firms was the
desire to:
A.
disperse production activities to optimal locations.
B. suppress the emerging economies such as China, India, and Brazil.
C.
spread communism throughout the world.
D. increase the competition between domestic industries and U.S. corporations.
E. bridge the national differences in culture, consumer preferences, and business
practices.
The motivation for much of the foreign direct investment by non-U.S. firms was the
desire to disperse production activities to optimal locations and to build a direct
presence in major foreign markets.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
102. The _____ refers to the total cumulative value of foreign investments.
A.
B.
C.
D.
E.
The stock of foreign direct investment refers to the total cumulative value of
foreign investments.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
103. Which of the following statements is true about the changing foreign direct
investment picture of the global economy?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
1-80
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
105. _____ has experienced a decline in the share of FDI stock between 1980 and 2010.
A.
B.
C.
D.
E.
India
The United States
France
China
South Korea
The share of the total stock accounted for by U.S. firms declined from about 38
percent in 1980 to 24 percent in 2010. Meanwhile, the shares accounted for by
France and the worlds developing nations increased markedly.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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106. Silver Fire Electric Inc., a U.S. company, has productive activities in more than two
countries. As a result, it would be most appropriate to refer to Silver Fire Electric as
a(n) _____ enterprise.
A.
B.
C.
D.
E.
regional
pan-American
unlimited
multinational
public
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
107. A notable trend in the demographics of the multinational enterprise since the
1960s is the:
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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108. In the global marketplace, the globalization of the world economy has resulted in a
relative decline in the:
A.
growth of medium-size and small multinationals.
B.
dominance of U.S. firm.
C.
rise of non-U.S. multinationals.
D. desire to disperse production activities outside the home country.
E. emergence of firms from developing nations as important competitors.
The globalization of the world economy has resulted in a relative decline in the
dominance of U.S. firms in the global marketplace.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: Drivers of Globalization
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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110. Which of the following statements is true about the trends in the changing nature
of multinational enterprises?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
A.
B.
C.
D.
E.
A trend in international business has been the growth of medium-size and small
multinationals (mini-multinationals).
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
112. In the present times, many of the former Communist nations of Europe and Asia:
A.
B.
C.
D.
E.
Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic politics and free market economics. For half a century,
these countries were essentially closed to Western international businesses.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
113. Which of the following statements is true about the former communist nations of
East Europe and central Asia?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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114. Which of the following conditions is most likely to act as a deterrent for foreign
firms willing to do business with former Communist nations of East Europe and
central Asia?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
115. Which of the following statements is true about the implications of revolutions
occurring in China for international businesses?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: Drivers of Globalization
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
116. In the past two decades, majority of Latin American countries have:
A.
B.
C.
D.
E.
In the past two decades, much has changed in Latin America. Debt and inflation
are down, governments have sold state-owned enterprises to private investors,
foreign investment is welcomed, and the regions economies have expanded.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
117. Which of the following statements is true about the global economy of the twenty
first century?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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118. Which of the following statements is true about the general implications
of globalization?
A.
Globalization is inevitable.
B. From a purely economic perspective, globalization is all good.
C. Globalization has no negative impacts on the economies of the developed
world.
D. Globalization has reduced the risks associated with global financial contagion.
E. As a result of globalization, a severe crisis in one region of the world can affect
the entire globe.
During 20082009 a crisis that started in the financial sector of America, where
banks had been too liberal in their lending policies to homeowners, swept around
the world and plunged the global economy into its deepest recession since the
early 1980s, illustrating once more that in an interconnected world a severe crisis
in one region can affect the entire globe.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
121. Which of the following statements is true about the implications of globalization on
developing countries?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
122. As a result of globalization, the _____ in the United States has increased.
A.
unemployment rate
B.
price of goods and services
C.
demand for unskilled workers
D.
standard of living
E. income equality between workers in skilled and unskilled sectors
The popular feeling is that when corporations such as Dell, IBM, or Citigroup
outsource service activities to lower-cost foreign suppliersas all three have done
they are exporting jobs to low-wage nations and contributing to higher
unemployment and lower living standards in their home nations (in this case, the
United States).
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
123. Supporters of globalization insist that dislocation in the form of lost jobs is a tradeoff that will ultimately lead to the economy being better off. Which of the
following is being justified in this case?
A.
B.
C.
D.
E.
Supporters of globalization argue that when a country embraces free trade, there
is always some dislocation, but the whole economy is better off as a result.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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124. Which of the following must be true if the critics of globalization are correct?
(p. 30)
125. Globalization critics argue that the decline in unskilled wage rates in advanced
economies is due to the:
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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126. Growing income inequality between the skilled and unskilled workers in advanced
nations, such as the United States, is a result of the:
A. wages for skilled workers being bid up by the labor market and the wages for
unskilled workers being discounted.
B. decrease in the outsourcing of low-wage manufacturing jobs offshore and a
corresponding increase in demand for unskilled workers.
C. shift within advanced economies toward jobs where the only qualification is
the willingness to turn up for work every day.
D. increasing wage gap between developing and developed nations.
E. shortage of unskilled workers and an excess supply of highly skilled workers.
Growing income inequality is a result of the wages for skilled workers being bid up
by the labor market and the wages for unskilled workers being discounted.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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A.
B.
C.
D.
E.
The North American Free Trade Agreement (NAFTA) was formed in 1994 between
Canada, Mexico and the United States.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
129. Which of the following is the most appropriate solution to the problem of rising
carbon dioxide emissions in developed economies?
A. Roll back the trade liberalization efforts that have fostered economic growth
and globalization.
B. Tie free trade agreements to the implementation of fewer environmental and
labor laws in less developed countries.
C. Get the nations of the world to agree to policies designed to limit pollutant
emissions.
D. Increase the export of low-wage manufacturing jobs to developing nations
E. Restrict international trade and investment only to services.
The solution to the problem of increasing carbon dioxide emissions with higher
income levels is probably not to roll back the trade liberalization efforts that have
fostered economic growth and globalization, but to get the nations of the world to
agree to policies designed to limit carbon emissions.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
A.
retaliatory trade policies of the developing nations.
B. policies imposed by the unelected bureaucrats of supranational organizations.
C.
rise of communism across the globe.
D.
growth of mini-multinationals.
E.
declining non-U.S. multinational corporations.
As perceived by critics, globalization is causing unelected bureaucrats to now
impose policies on the democratically elected governments of nation-states,
thereby undermining the sovereignty of those states.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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132. Which of the following falls under the functions of the WTO?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
133. Which of the following is a major reason for some of the world's poorest countries
to have suffered from economic stagnation?
A.
Commitment to democratic government
B.
Rapidly expanding population
C. Implementation of the economic policies that are based on free market
economics
D.
Tough labor regulations
E.
Low barriers to foreign direct investment
Countries such as Afghanistan, Cambodia, Cuba, Haiti, Iraq, Libya, Nigeria, Sudan,
Vietnam, and Zaire have failed to improve the economic lot of their citizens during
recent decades. A contributing factor is the rapidly expanding populations in many
of these countries.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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134. Free trade alone, some argue, is a necessary but not sufficient prerequisite to help
the worlds poorest countries bootstrap themselves out of poverty. They also
recommend:
A.
B.
C.
D.
E.
Free trade alone is a necessary, but not sufficient prerequisite to help HIPC
countries bootstrap themselves out of poverty. Instead, large-scale debt relief is
needed for the world's poorest nations to give them the opportunity to restructure
their economies and start the long climb toward prosperity.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
135. The minimum that a firm has to do to engage in international business is to:
A.
export or import products from other countries.
B.
invest directly in operations in another country.
C. establish joint ventures or strategic alliances with companies in other
countries.
D. export low-wage manufacturing jobs to companies in other countries.
E.
develop franchises and subsidiaries in other countries.
All a firm has to do to engage in international business is export or import products
from other countries.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
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136. Ryan is the executive general manager of a U.S. multinational and Jacob is a
manager in a similar position, but works for another U.S. company that operates
only in it's home country. In this context, which of the following business functions
will be most typically exclusive to Ryan?
A.
Marketing a product or service
B. Maintaining healthy relations with the U.S. government
C.
Planning on a business strategy
D.
Adhering to the labor and environmental standards
E. Choosing an appropriate mode for entering a particular foreign country
The managers in an international business must decide which foreign markets to
enter and which to avoid. They must choose the appropriate mode for entering a
particular foreign country.
Essay Questions
137. What is globalization? How do global companies such as IKEA, Starbucks, and
McDonald's facilitate the creation of a global market?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Globalization has several facets, including the globalization of markets and the
globalization of production.
The globalization of markets refers to the merging of historically distinct and
separate national markets into one huge global marketplace. Falling barriers to
cross-border trade have made it easier to sell internationally. 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.
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost
and quality of factors of production (such as labor, energy, land, and capital). By
doing this, companies hope to lower their overall cost structure or improve the
quality or functionality of their product offering, thereby allowing them to compete
more effectively.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
139. Briefly trace the history of the G20 and describe its current role in international
business.
Established in 1999, the G20 comprises the finance ministers and central bank
governors of the 19 largest economies in the world, plus representatives from the
European Union and the European Central Bank. Originally established to
formulate a coordinated policy response to financial crises in developing nations,
in 2008 and 2009 it became the forum through which major nations attempted to
launch a coordinated policy response to the global financial crisis that started in
America and then rapidly spread around the world, ushering in the first serious
global economic recession since 1981.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
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Many of the barriers to international trade took the form of high tariffs on imports
of manufactured goods. The typical aim of such tariffs was to protect domestic
industries from foreign competition. One consequence, however, was beggar thy
neighbor retaliatory trade policies, with countries progressively raising trade
barriers against each other.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
141. What are the implications of the Uruguay Round held under the umbrella of GATT
for international business?
Under the umbrella of GATT, eight rounds of negotiations among member states
worked to lower barriers to the free flow of goods and services. The most recent
negotiations to be completed, known as the Uruguay Round, were finalized in
December 1993. The Uruguay Round further 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.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
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142. What is a multinational enterprise? What have been the two most notable trends in
multinational enterprises since the 1960s?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
143. In the context of international trade and investment, describe how the former
Communist nations of Europe and Asia have been changing.
Many of the former Communist nations of Europe and Asia seem to share a
commitment to democratic politics and free market economics. If this continues,
the opportunities for international businesses are significant. For half a century,
these countries were essentially closed to Western international businesses. Now
they present a host of export and investment opportunities. Just how this will play
out over the next 10 to 20 years is difficult to say. The economies of many of the
former Communist states are still relatively undeveloped, and their continued
commitment to democracy and free market economics cannot be taken for
granted. Disturbing signs of growing unrest and totalitarian tendencies continue to
be seen in several Eastern European and Central Asian states, including Russia,
which has shown signs of shifting back toward greater state involvement in
economic activity and authoritarian government. Thus, the risks involved in doing
business in such countries are high, but so may be the returns.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
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The world may be moving toward a more global economic system, but
globalization is not inevitable. Countries may pull back from the recent
commitment to liberal economic ideology if their experiences do not match their
expectations. There are clear signs, for example, of a retreat from liberal economic
ideology in Russia. If Russias hesitation were to become more permanent and
widespread, the liberal vision of a more prosperous global economy based on free
market principles might not occur as quickly as many hope. Clearly, this would be
a tougher world for international businesses.
145. Discuss the arguments that are for and against globalization regarding jobs and
(p. 29) income.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
1-101
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146. Discuss the concerns voiced by critics of globalization regarding labor policies and
environment.
A source of concern for critics of globalization is that free trade encourages firms
from advanced nations to move manufacturing facilities to less developed
countries that lack adequate regulations to protect labor and the environment
from abuse by the unscrupulous. Globalization critics often argue that adhering to
labor and environmental regulations significantly increases the costs of
manufacturing enterprises and puts them at a competitive disadvantage in the
global marketplace vis--vis firms based in developing nations that do not have to
comply with such regulations. Firms deal with this cost disadvantage, the theory
goes, by moving their production facilities to nations that do not have such
burdensome regulations or that fail to enforce the regulations they have.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
147. What are the various reasons for economic stagnation in many of the worlds
(p. 34) poorest countries?
Many of the world's poorest countries have suffered from totalitarian governments,
economic policies that destroyed wealth rather than facilitated its creation,
endemic corruption, scant protection for property rights, and war. Such factors
help explain why countries such as Afghanistan, Cambodia, Cuba, Haiti, Iraq,
Libya, Nigeria, Sudan, Vietnam, and Zaire have failed to improve the economic lot
of their citizens during recent decades. A complicating factor is the rapidly
expanding populations in many of these countries. Without a major change in
government, population growth may exacerbate their problems.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
148. Why are supranational organizations, such as the World Trade Organization and
the United Nations, criticized?
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
149. What are some of the challenges faced by managers of an international business?
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
1-103
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges
for business managers.
Topic: Managing in the Global Marketplace
1-104
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in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.