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Chapter 1 Exam Review

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Since the collapse of communism at the end of the 1980s, the erstwhile communist nations have transformed their economies by globalizing their markets. This involves
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privatizing state-owned enterprises
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Which of the following is a consequence of globalization?
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Increasing outsourcing of services
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Which of the following has enabled globalization of markets?
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Falling barriers to cross border trade
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Which of the following factors hinders globalization of consumer goods market?
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National differences in tastes and preferences
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Globalization of markets results in markets becoming _____.
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less diverse
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A U.S. Investment firm, Fin-Smart, set up a customer service call center in India to take advantage of the lower labor costs. This is called _____.
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outsourcing
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Early outsourcing efforts were primarily confined to _____.
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manufacturing activities
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Which of the following is NOT an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe?
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Government regulations
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The General Agreement on Tariffs and Trade (GATT) was responsible for _____.
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policing the global marketplace
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The ______ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states.
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World Trade Organization
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The World Trade Organization promotes _____.
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lowering of barriers to cross-border trade and investment
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Which of the following is true about the International Monetary Fund?
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It is seen as the lender of last resort to nation-states whose economies are in turmoil.
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The _____ was established on October 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security.
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United Nations
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_____ occurs when a firm exports goods or services to consumers in another country.
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International trade
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Which of the following is NOT a consequence of the reduction in trade barriers and restrictions on FDI since 1950?
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Nations are becoming more independent of each other for important goods and services.
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The relative decline of the United States in the share of world output and world exports reflects _____.
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the growth in the economic development of the world economy
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Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects:
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the increasing internationalization of business corporations.
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Which of the following countries has been the largest recipient of foreign direct investment and received about $60 billion to $100 billion a year in inflows in 2004-2009?
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China
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A multinational enterprise (MNE) is a firm that _____.
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has production units in more than two countries
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Which of these statements pertaining to cross-border FDI flows is true?
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There was a growth of FDI between 2004 and 2007.
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In the last two decades, Latin American countries like Brazil, Mexico, and Chile have _____.
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welcomed foreign investment
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Which of the following is a risk associated with globalization?
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Global financial contagion
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Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers:
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is due to technological changes that create greater demand for skilled workers.
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Globalization is criticized because it increases the power of _____.
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supranational organizations over nation-states
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An international business, unlike a multinational enterprise, _____.
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need not invest directly in operations in other countries
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Which of the following statements is true about an international business?
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An international business must find ways to work within the limits imposed by government intervention.
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A number of econometric studies have found consistent evidence of a hump-shaped relationship between income levels and pollution levels. According to this, as an economy grows and income levels rise:
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after a while the pollution levels decrease