Practice Questions 1

Flashcard maker : Lily Taylor
The shift toward a more integrated and interdependent world economy is referred to as globalization
T
A company does not need a large size to facilitate, and benefit from, the globalization of markets
T
Companies hope to lower their overall cost structure or improve the quality or functionality of their product offering through globalization of production
T
The most global markets currently are markets for consumer products
F
Outsourcing is a process that is limited to manufacturing enterprises
F
The World Bank has focused on policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties
F
The World Bank is known as the lender of the last resort
F
One of the UN’s central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development
T
The Uruguay Round, finalized in Dec 1993, reduced protection for patents, trademarks, and copyrights.
F
Rivers Inc., a US based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. This is an example of a foreign direct investment
T
World Bank gives an aid of 100 million dollars to Kenya for creating rural health care facilities. This is an example of foreign direct investment
F
The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market
T
According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950
T
The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services
F
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 protected from foreign competitors
F
Globalization of markets has resulted in greater differentiation of consumer tastes and preferences
F
A multinational enterprise (MNE) is any business that exports or imports products from other countries
F
A current trend in international business is the decline of medium-sized and small multinationals, known as mini-multinationals
F
The globalization of the world economy has resulted in a relative increase in the dominance of US firms in the global marketplace
F
Recent evidence indicated that the solution to the problem of stagnant incomes among the unskilled is to be found in increasing government regulation of markets
F
According to supporters of free trade, as countries get richer they commit greater violation of environmental and labor regulations
F
According to critics of globalization, today’s interdependent global economy limits a nation’s national sovereignty
T
Critics of globalization suggest that over the last century, the gap between the rich and poor nations of the world has shrunken
F
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
Privatizing state-owned enterprises
Consequence of globalization
increasing outsourcing of services
Enabled globalization of markets
falling barriers to cross border trade
Hinders globalization of consumer goods market
national differences in tastes and preferences
globalization of markets results in markets becoming
less diverse
A US investment firm, Fin-Smart, set up a customer service call center in India to take advantage of the lower labor costs. This is called
outsourcing
Early outsourcing efforts were primarily confined to
horizontal integration
Not an impediment that makes it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe
reduced tariffs on imports of manufactured goods
The General Agreement on Tariffs and Trade (GATT) was responsible for
policing global marketplace
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
World Trade Organization (WTO)
The World Trade Organization promotes
lowering of barriers to cross-border trade and investment
The International Monetary Fund
it is seen as the lender of last resort to nation-states whose economies are in turmoil
What was est. on Oct 24, 1945, by 51 countries committed to preserving peace through international cooperation and collective security
United Nations
What occurs when a firm exports services to consumers in another country
International Trade
Not a consequence of the reduction in trade barriers and restrictions on FDI since 1950
Nations are becoming more independent of each other for important goods and services
The relative decline of the United States in the share of world output and world exports reflects ___
the growth in the economic development of the world economy
Throughout the 1990s, the amount of foreign direct investment directed at both developed and developing nations increased dramatically. This trend reflects ___
the increasing internationalization of business corporations
Which county has been the largest recipient of foreign direct investment and received about 60 billion to 100 billion a year in inflows in 2004-2009
China
A multinational enterprise (MNE) is a firm that ___
has production units in more than two countries
FDI statement
there was a growth of FDI between 2004-2007
In the last two decades, Latin American countries like Brazil, Mexico, and Chile have ___
welcomed foreign investment
Risk associated with globalization
global financial contagion
Supporters of globalization maintain that the apparent decline in real wage rates of unskilled workers
is due to technological changes that create greater demand for skilled workers
Globalization is criticized because it increases the power of
supranational organizations over nation-states
An international business, unlike a MNE,
need not invest directly in operations in other countries
True about an international business
an international business must find ways to work within the limits imposed by government intervention
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
after a while the pollution levels decrease

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