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1. 1.The incentive for lowering of barriers to trade and investment has come primarily from the leaders of the world's most powerful economies. 


True    False

 

2. A major feature of contemporary globalisation is that countries of one region are not adversely affected by crises, such as the economic crisis in Asia in 1997-98 and the sub-prime mortgage meltdown in the US, occurring in another region. 


True    False

 

3. The entry of foreign competition into previously protected economies helped drive down prices. 


True    False

 

4. The movement of the America's Cup, a symbol of supremacy in yachting, away from the US is a good example of loss of US dominance in the international economy. 


True    False

 

5. Globalisation of production networks such as that of Boeing 777 helps in lowering of the cost of production and at the same time helps the economies of host countries. 


True    False

 

6. Outsourcing pertains only to the manufacturing of tangible goods. 


True    False

 

7. The new round of trade talks that commenced in 2001 at Doha for further liberalisation of trade has been concluded successfully. 


True    False

 

8. Although a number of multinationals have come up in recent years from emerging economies such as China, India and Brazil, the American multinationals still dominate international business. 


True    False

 

9. The movement of manufacturing to low-wage countries would destroy manufacturing activities in developed countries. 


True    False

 

10. Economic progress would introduce greater environmental concern and thus prevent use of lax environmental regulations for shifting of pollution-generating activities. 


True    False

 

11. Globalisation does not affect any nation's sovereignty, and the emergence of international institutions such as the WTO and IMF does not compromise their freedom to take suitable action. 


True    False

 

12. 12.The notion that national economies are relatively self-contained entities is on the rise. 


True    False

 

13. 13.For the last 50 years, the volume of goods, services and investment crossing national borders has consistently expanded faster than world output. 


True    False

 

14. 14.Today, the world economy is fast moving toward a world in which barriers to cross-border trade and investment are declining. 


True    False

 

15. 15.The shift toward a more integrated and interdependent world economy is referred to as globalisation. 


True    False

 

16. 16.The merging of historically distinct and separate markets into one huge global marketplace is known as the globalisation of markets. 


True    False

 

17. 17.The majority of US firms that export are large multinationals that employ 500 or more people. 


True    False

 

18. 18.The most global markets currently are markets for industrial goods and materials that serve a universal need the world over. 


True    False

 

19. 19.Outsourcing is a process that is limited to manufacturing enterprises. 


True    False

 

20. 20.Because of their nature, service activities cannot be outsourced to other companies. 


True    False

 

21. 21.The World Bank is responsible for maintaining order in the American monetary system. 


True    False

 

22. One of the UN central mandates is the promotion of higher standards of living, full employment and conditions of economic and social progress and development. 


True    False

 

23. 23.Underlying the trend towards greater globalisation is technological change and a decline in barriers to the free flow of goods, services and capital. 


True    False

 

24. 24.According to the United Nations most changes between 1992 and 2005 to laws governing FDI have resulted in a less favourable environment for FDI. 


True    False

 

25. 25.According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950. 


True    False

 

26. The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services. 


True    False

 

27. 27.Moore's Law predicts that the power of microprocessor technology doubles and its cost of production falls by half every 18 months. 


True    False

 

28. 28.Efficiency gains associated with containerisation have caused transportation costs to fall dramatically. 


True    False

 

29. The advent of commercial jet travel, by reducing the time needed to get from one location to another, has effectively shrunk the globe. 


True    False

 

30. 30.Today, global communication networks and global media are creating a worldwide culture. 


True    False

 

31. 31.According to forecasts, a further relative decline in the share of world output and world exports accounted for by the US and other long-established developed nations is unlikely. 


True    False

 

32. A current trend in international business is the growth of medium-sized and small multinationals, known as mini-multinationals. 


True    False

 

33. Current trends indicate that the world is moving rapidly towards an economic system that is more favourable for international business. 


True    False

 

34. Many economists, politicians and business leaders believe that the shift toward a more integrated and interdependent global economy is a positive trend. 


True    False

 

35. 35.Studies have shown that wage rates for unskilled workers in many advanced economies have fallen in recent years. 


True    False

 

36. 36.Recent evidence indicates that the solution to the problem of stagnant incomes among the unskilled is to be found in increasing society's investment in education to reduce the supply of unskilled workers. 


True    False

 

37. 37.A source of concern of critics of free trade is that it usually encourages firms from advanced countries to move manufacturing facilities to less developed countries that lack adequate regulations to protect labour and the environment from abuse. 


True    False

 

38. 38.According to supporters of free trade, as countries get richer they enact tougher environmental and labour regulations. 


True    False

 

39. 39.According to critics of globalisation today's interdependent global economy limits a nation's national sovereignty. 


True    False

 

40. 40.Critics of globalisation suggest that over the last century, the gap between the rich and poor nations of the world has shrunken. 


True    False

 

41. 41.Debt continues to be a major burden for poorer nations as they strive to get ahead. 


True    False

 

42. Supporters of debt relief argue that new democratic governments in poor nations should not be forced to honour debts that their corrupt and dictatorial predecessors incurred and mismanaged long ago. 


True    False

 

43. An international business is any firm that engages in international trade or investment. 


True    False

 

44. 44.The managers of an international business must decide whether it is ethical to adhere to the lower labour and environmental standards found in many less developed nations. 


True    False

 

45. 45.In general, managing an international business is a more complex task than managing a business that serves only the local market. 


True    False

 

46. 46.The introduction of debt relief has helped many countries but to have lasting effect such debt relief must be matched by 


A. Isolating these countries from international trade
B. Changes in the economic policies of these countries
C. Providing more financial aid to these countries
D. Changes in governmental policies of these countries

 

47. 47.Reduction in subsidies to the agricultural sector by developed countries 


A. Can help farmers from developed countries by making them more competitive
B. Will result in saving a large sum from governmental budget expenses
C. Will substantially improve global economic welfare
D. Will improve the agricultural productivity in developed countries

 

48. 48.The critics of globalisation argue that 


A. Globalisation will introduce greater economic interdependence among nations
B. Globalisation will lessen economic disparity among nations
C. Globalisation will improve the living standards of everybody
D. Globalisation will shift national power away from national governments to supranational institutions and unelected bureaucrats

 

49. 49.One major concern of globalisation has been the degradation of environment. Such degradation is expected to be 


A. Uniform across the globe
B. Greater in developing countries than in developed countries
C. Irrelevant for global warming
D. Not relevant for the international economy

 

50. 50.There are, in general, two views about globalisation. One view argues that globalisation is a win-win situation; the other argues that globalisation will hurt more than the highly segregated economy of previous times. Supporters of globalisation argue that 


A. Everything is ideal with globalisation
B. Emissions of carbon dioxide will reduce with globalisation
C. Nations are independent and free to act in their best interests
D. The benefits of globalisation outweigh the costs

 

51. 51.The process of globalisation and the development of market economies are closely related. Such development is a result of 


A. The pressure of developed countries on developing countries
B. The acceptance of liberal economic ideology by countries such as China, India, South Africa and South Korea
C. Growth in the power of multinational corporations
D. Improvement in infrastructure

 

52. 52.The arrival of multinational corporations from China, South Korea, Brazil, Malaysia and Hong Kong suggests that 


A. Multinationals from developed countries are still dominating the ranks of the world's largest multinationals
B. Such firms are expected to be important competitors in global markets
C. Such entry is short-lived
D. Such multinationals will replace existing multinationals from developed countries

 

53. 53.The investment by Japanese firms in North America and Europe is linked to moving their production 


A. To countries with cheaper labour to save on costs
B. Because the environmental regulations in Japan were highly restrictive
C. To avail themselves of the technological developments in the US and the European Union
D. As a hedge against currency uncertainties and to avoid trade barriers

 

54. 54.‘By 2035, the Chinese economy will be larger than the American economy in terms of GDP based on purchasing power parity.'


This statement 
A. Is true because forecasts are always correct
B. Is based on careful economic analysis
C. May not be true because forecasts are not always correct
D. Is true because the share of developing countries in the world economy has been growing continuously over the last few decades

 

55. 55.The access to Hollywood films, US television networks and McDonald's restaurants around the world is a sign of 


A. Globalisation
B. Domination of American culture
C. Change in the taste of people around the world
D. Lowering of tariff barriers

 

56. 56.The major reason for globalisation in recent years has been the 


A. Increase in telecommunication infrastructure and the internet
B. Improvement in the investment environment
C. Lowering of the cost of transportation
D. All of the given answers are correct

 

57. 57.The International Monetary Fund (IMF) has been regarded as the lender of last resort. The positive contribution of the IMF 


A. Is accepted without any controversy
B. Is because it does not compromise the sovereignty of nations receiving loans from the IMF
C. Is because the IMF loans are extended without any conditions
D. Is not widely accepted because of the highly controversial nature of its conditionality

 

58. 58.Which of the following is not characteristic of globalisation? 


A. National economies are turning into independent economic systems
B. Material culture is starting to look similar the world over
C. Perceived distance is shrinking due to advances in transportation and telecommunications
D. Barriers to cross-border trade and investment are declining

 

59. 59.Globalisation has _____ the opportunities for a firm to expand its revenues by selling around the world and _____ its costs by producing in nations where key inputs are cheap. 


A. Reduced, reduced
B. Increased, increased
C. Increased, reduced
D. Reduced, increased

 

60. 60.Identify the incorrect statement concerning globalisation. 


A. It has been blamed for unemployment in developed nations, environmental degradation and the Americanisation of popular culture
B. It has created new threats for businesses accustomed to dominating their domestic markets
C. It is transforming industries and is highly welcomed by those who believed their jobs were protected from foreign competition
D. According to most economists it is a very beneficial process where gains outweigh the losses by a wide margin

 

61. 61.In the US, _____ per cent of firms that export are small companies employing fewer than 100 people. 


A. 90
B. 75
C. 50
D. 30

 

62. 62.The most global markets currently are markets for 


A. Services
B. Consumer goods
C. Consumer durables
D. Industrial goods

 

63. 63.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? 


A. Reduced transportation costs
B. Government regulations
C. Issues associated with economic and political risk
D. Barriers to foreign direct investment

 

64. 64.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. 


A. International Development Association
B. World Bank
C. International court of justice
D. World Trade Organization

 

65. 65.The _____ was created in 1944 by 44 nations that met in Breton Woods, New Hampshire to promote economic development. 


A. World Bank
B. World Monetary Fund
C. World Trade Organization
D. United Nations

 

66. 66.The institution, created in 1944 at Bretton Woods, responsible for maintaining order in the international monetary system is the: 


A. IMF
B. WTO
C. UN
D. UNESCO

 

67. 67._____ occur(s) when a firm exports goods or services to consumers in another country. 


A. International trade
B. Foreign direct investment
C. Inward investment
D. Merger and acquisitions

 

68. 68.The _____ was established to remove barriers to the free flow of goods, services and capital between nations. 


A. UN
B. IMF
C. GATT
D. IDA

 

69. 69.GATT's Uruguay Round of negotiations resulted in all of the following except that it 


A. Further reduced trade barriers
B. Extended GATT to cover services as well as manufactured goods
C. Provided enhanced protection for patents, trademarks and copyrights
D. Established the International Monetary Fund

 

70. 70.Under the Uruguay Round of GATT 


A. Regulations to make it harder for foreign companies to enter markets were mandated
B. The World Trade Organization was established
C. The volume of world trade decreased
D. Barriers to trade in manufactured goods were incorporated

 

71. 71.The reduction in the average tariff rates on manufactured products since 1950 implies all of the following except that 


A. Firms are dispersing parts of their production process to global locations to drive down production costs and increase product quality
B. The economies of the world's nation states are becoming more intertwined
C. Nations are becoming increasingly independent of each other for important goods and services
D. The world has become significantly wealthier since 1950

 

72. 72.Which of the following statements regarding cross-border trade and investment is not true? 


A. ‘Protection' from foreign competitors has been, at times, demanded by the United States
B. Forecasts indicate a return to the restrictive trade policies of the 1920s and 30s
C. If trade barriers decline no further they will put a brake upon the globalisation of both markets and production
D. It is not clear whether the political majority in the industrialised world favours further reductions in trade barriers

 

73. 73.The growing integration of the world economy is 


A. Increasing the intensity of competition in a wide range of manufacturing and service industries
B. Decreasing the intensity of competition in manufacturing industries and increasing the intensity of competition in services
C. Increasing the intensity of competition in manufacturing industries and decreasing the intensity of competition in services
D. Narrowing the scope of competition in a wide range of service, commodity and manufacturing industries

 

74. 74.Identify the incorrect statement pertaining to the World Wide Web 


A. It makes it much easier for buyers and sellers to find each other
B. Viewed globally, it is emerging as an equaliser
C. It rolls back all of the constraints of location, scale and time zones
D. It allows businesses to expand their global presence at a lower cost than ever before

 

75. 75.Although the characteristics of the global economy have changed dramatically over the past 30 years, as late as the 1960s all of the following demographic characteristics were true, except 


A. The US dominated the world economy
B. Small, US entrepreneurial firms dominated the international business scene
C. The US dominated the world foreign direct investment picture
D. Roughly half the world was governed by centrally planned economies of the Communist world

 

76. 76.Which of the following statements pertaining to the changing demographics of world GDP and trade from 1963 to 2006 is not true? 


A. As emerging economies continue to grow, a relative decline in the share of world output and world exports accounted for by the US seems unlikely
B. Forecasts predict a rapid rise in the share of world output accounted for by some developing nations
C. A decline in the share enjoyed by rich industrialised countries such as Great Britain, Germany, Japan and the US is likely
D. If current trends continue, the Chinese economy could be larger than that of the US on a purchasing power parity basis

 

77. 77.Which of the following countries has had the maximum relative decline in its share of world output since 1963? 


A. Canada
B. United States
C. Japan
D. Germany

 

78. 78.According to World Bank numbers 


A. Developing nations currently account for more than 60 per cent of world economic activity
B. Rich nations currently account for more than 70 per cent of world economic activity
C. Today's rich nations may account for 55 per cent of world economic activity by 2020
D. Today's developing nations may account for more than 60 per cent of world economic activity by 2020

 

79. 79.What is the total cumulative value of foreign investments best referred to as? 


A. Accumulation of foreign shares
B. Portfolio investments
C. Stock of foreign direct investments
D. Stock market investments

 

80. 80.Firms based in _____ accounted for 11.9 per cent of the stock of foreign direct investment in 2005, up from only 1.1 per cent in 1980. 


A. North America
B. Developing countries
C. United Kingdom
D. Netherlands

 

81. 81.Which of these statements pertaining to cross-border FDI flows is true? 


A. The growth of FDI resumed in 2004 and continued through 2006
B. A surge in FDI from 1995 to 1997 was followed by a slump from 1998 to 2000
C. Among developing nations, the largest recipient of FDI has been Russia
D. The dramatic increase in FDI reflects the decreasing internationalisation of business corporations

 

82. 82.Which of the following countries has been the largest recipient of foreign direct investment and received about $70 billion a year in inflows in 2005 and 2006? 


A. Brazil
B. Russia
C. India
D. China

 

83. 83.According to UN data, the ranks of the world's largest 100 multinationals are dominated by firms from 


A. Developed economies
B. Firms from China
C. Firms from Europe
D. Developing countries

 

84. 84.Identify the incorrect statement regarding the former Communist nations of Europe and Asia. 


A. The economies of most of the former Communist states are very strong and developed
B. Many of the former Communist nations of Europe and Asia share a commitment to free market economies
C. As a result of disturbing signs of growing unrest and totalitarian tendencies, the risks involved in doing business in these countries is very high
D. For about half a century these countries were essentially closed to Western international business

 

85. 85.Which of the following observations concerning Latin American countries is true? 


A. Complete restrictions on direct investment by foreign firms
B. Characterised by low growth, high debt and hyperinflation
C. Debt and inflation are up compared to previous decades
D. Substantial opportunities exist, but are accompanied by substantial risks

 

86. 86.Which of the following statement pertaining to changes in the global economy of the 21st century is not true? 


A. Barriers to the free flow of goods, services and capital have been coming down
B. Volume of cross-border trade and investment has been growing more rapidly than global output
C. National economies are becoming more independent and moving away from the global economic system
D. As economies advance, more nations are joining the ranks of the developed world

 

87. 87.Which of the following does not help create an economic system that is favourable to international business? 


A. Decreased privatisation
B. Widespread deregulation
C. Open markets
D. Falling trade and investment barriers

 

88. 88.In December 1999 anti-globalisation protesters in Seattle targeted the _____, which was meeting to try to discuss cutting barriers to cross-border trade and investment and was seen as a promoter of globalisation. 


A. GATT
B. WTO
C. World Bank
D. IMF

 

89. 89.When a company ‘exports jobs' overseas, the company is 


A. Helping domestic workers by pushing up wage rates
B. Increasing the demand of qualified domestic workers
C. Taking advantage of lower wages in foreign markets
D. Deceiving the supporters of globalisation

 

90. 90.If the critics of globalisation are correct, all of the following things must be shown except 


A. The share of national income received by labour, as opposed to the share received by the owners of capital should have declined in advanced nations
B. Even though labour's share of the economic pie may have declined, living standards need not deteriorate if the size of the total pie has increased sufficiently to offset the decline in labour's share
C. The decline in labour's share of national income must be due to moving production to low-wage countries, as opposed to improving production technology and productivity
D. Economic growth in developed nations has offset the fall in unskilled workers' share of national income, raising their living standards

 

91. 91.Critics of globalisation maintain that the apparent decline in real wage rates of unskilled workers 


A. Owes far more to a technology-induced shift within advanced economies toward jobs that require significant education and skills
B. Is due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers
C. Has been impacted most by technological change
D. Can be checked by increasing society's investment in education to reduce the supply of unskilled workers

 

92. 92.Which of the following is not a concern of critics of globalisation and supranational organisations? 


A. Unelected bureaucrats of supranational organisations would impose policies on the democratically elected governments of nation-states
B. Supranational organisations would undermine the sovereignty of democratically elected states
C. A nation's ability to control its own destiny would be limited by supranational organisations
D. Real power would reside with individual nation-states, not supranational organisations

 

93. 93.Many of the world's poorer nations suffering from economic stagnation are being held back by 


A. Large debt burdens
B. Strong protection of property rights
C. Economic policies that create wealth
D. Decreased barriers to free trade

 

94. 94.Why has the process of globalisation never reached most of the highly indebted countries? Discuss with examples. 


 


 

 

 



95. 95.The process of globalisation and environmental factors are directly related. Discuss the environmental implications of globalisation. 

 


 

 

 



96. 96.What are the implications of globalisation of production? 

 


 

 

 



97. With the help of an example discuss the characteristics of globalisation. 

 


 

 

 



98. How has globalisation changed the business environment? 

 


 

 

 



99. 99.Explain what is meant by the globalisation of markets. Provide an example. What are the most global markets? 

 


 

 

 



100. Discuss the concept of the globalisation of production. 

 


 

 

 



101. 101.What is the World Trade Organization? What is its role in the world economy? 

 


 

 

 



102. 102.What is the International Monetary Fund? What is the World Bank? What is their relationship, if any, with each other? 

 


 

 

 



103. Explain the trends in world trade and foreign direct investment over the last half century. 

 


 

 

 



104. 104.How has technological change affected global markets? What key innovations have changed the nature of how ‘we do business?' 

 


 

 

 



105. Explain the notion of the Web emerging as an equaliser. 

 


 

 

 



106. 106.Innovations in transportation have had a major impact on global trade. Consider one of these innovations: containerisation. Why is this innovation so significant? 

 


 

 

 



107. 107.Discuss the demographics of world trade since the 1960s. How has the role of the US changed? How is world trade expected to change in the future? 

 


 

 

 



108. 108.How has the foreign direct investment picture changed since the 1960s? 

 


 

 

 



109. 109.What is a multinational enterprise (MNE)? How does a mini-multinational differ from an MNE? 

 


 

 

 



110. 110.Many companies are keeping their eyes on China. Why is China so important to international business? 

 


 

 

 



111. 111.Consider the global economy of the 21st century. What important changes are taking place? What do these changes mean for international companies? 

 


 

 

 



112. 112.Consider whether the shift toward a more integrated and interdependent global economy is a good thing. Discuss the shift from the eyes of the consumer, the worker, the company and the environmentalist. 

 


 

 

 



113. 113.Discuss what occurred in Seattle in 1999 at the meeting of the WTO and why the events were important to the future of global trade. 

 


 

 

 



114. 114.Falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies. Discuss this statement. Do you agree? Why or why not? 

 


 

 

 



115. 115.Discuss the effect of globalisation on national sovereignty. 

 


 

 

 


c1 Key
 

1. (p. 5) 1.The incentive for lowering of barriers to trade and investment has come primarily from the leaders of the world's most powerful economies. 





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