1) ________ refers to the shift toward a more integrated and interdependent world economy.
A) Outsourcing
B) International marketing
C) Privatization
D) Globalization
2) In 2008 and 2009, the ________ became the forum through which major nations attempted
to
launch a coordinated policy response to the global financial crisis, which started in America.
A) United Nations
B) Group of Seven (G7)
C) Group of Twenty (G20)
D) World Trade Organization
3) Which factor has contributed to the globalization of markets?
A) a decrease in foreign direct investment
B) global convergence of consumer tastes and preferences
C) an increase in cross-border barriers to trade
D) the trend to separate a homogeneous market into separate national markets
4) Globalization has resulted in
A) less interdependence between national economies.
B) an increase in the use of outsourcing.
C) a collective material culture becoming more diverse.
D) increasing barriers to cross-border trade.
5) Which factor hinders globalization of consumer goods market?
A) national and cultural differences in tastes and preferences
B) increasing incomes in emerging markets
C) homogenization of material culture
D) increased outsourcing of goods and services
6) Globalization of markets results in markets becoming
A) less interdependent.
B) less diverse.
C) more protected.
D) less competitive.
7) A U.S. investment firm set up a customer service call center in India to take advantage of
lower labor costs. This is called
A) homogenizing markets.
B) vertical integration.
C) outsourcing.
D) horizontal integration.
8) Early outsourcing efforts were primarily confined to
A) health care.
B) service activities.
C) technological research.
D) manufacturing activities.
9) What impedes firms from achieving the optimal dispersion of their productive activities to
locations around the globe?
A) transportation costs
B) government deregulations
C) reduction of barriers to trade between countries
D) reduction of barriers to foreign direct investment
10) The General Agreement on Tariffs and Trade (GATT) was responsible for
A) protecting government-owned enterprises.
B) promoting free trade and reducing trade barriers.
C) limiting nuclear testing.
D) promoting environment friendly technology.
11) 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
12) The World Trade Organization promotes
A) the lowering of barriers to cross-border trade and investment.
B) the development of poor nations through low-interest loans.
C) state ownership of major enterprises.
D) the regulation of national economies.
13) Which statement is true about the International Monetary Fund (IMF)?
A) It is primarily responsible for policing the world trading system.
B) It is seen as the lender of last resort to nation-states whose economies are in
turmoil.
C) It is responsible for establishing multinational treaties to govern the global business
system.
D) It was established to formulate a coordinated policy response to financial crises in
developing nations.
14) The ________ was established on October 24, 1945, by 51 countries committed to
preserving
peace through international cooperation and collective security.
A) World Trade Organization
B) United Nations
C) G20
D) World Bank
15) The G20 was originally established to
A) preserve peace through international cooperation and collective security.
B) maintain order in the international monetary system.
C) formulate a coordinated policy response to financial crises in developing nations.
D) manage, regulate, and police the global marketplace.
16) Which item is a factor of production?
A) tariffs
B) transportation costs
C) capital
D) government
17) Which institution focuses on making low-interest loans to cash-strapped governments in
poor
nations that wish to undertake significant infrastructure investments?
A) the WTO
B) the GATT
C) the World Bank
D) the IMF
18) Which institution was established to maintain order in the international monetary system?
A) the WTO
B) the G20
C) the World Bank
D) the IMF
19) Which statement is true of the International Monetary Fund (IMF)?
A) It is often seen as the lender of first choice to nation-states whose economies are in
turmoil.
B) Its loans come with no strings attached.
C) It is the less controversial of the two sister institutions, the IMF and the World Bank.
D) It has emerged as a significant player in the global economy.
20) ________ occurs when a firm exports goods or services to consumers in another country.
A) International trade
B) Foreign direct investment
C) Inward investment
D) Outsourcing
21) The negotiations in the Uruguay Round of GATT led to
A) an easing of lending restrictions for cash-strapped nation-states.
B) enhanced protection for patents, trademarks, and copyrights.
C) increased trade barriers.
D) reduced coverage of services and manufactured goods.
22) ________ predicts that the power of microprocessor technology doubles and its cost of
production falls in half every 18 months.
A) Keynes’s Law
B) Say’s Law
C) Moore’s Law
D) Sullivan Principle
23) Containerization has revolutionized the transportation business by
A) reducing the time needed to get from one location to another.
B) simplifying the transportation process and lowering the cost of shipping goods.
C) providing a means for buyers and sellers to find each other easily in a global
economy.
D) offering enterprises to coordinate and control a globally dispersed production system.
24) The volume of world trade in merchandised goods has been
A) growing at the same rate as world GDP.
B) growing faster than world GDP.
C) growing slower than world GDP.
D) declining faster than world GDP.
25) Smith Global Industries has decided to invest resources in business activities outside its
home country. This is called
A) foreign direct investment (FDI).
B) direct international investment (DII).
C) international trade (IT).
D) foreign direct production (FDP).
26) In 2009, the financial crisis in the United States was triggered by
A) the global hike in the price of crude oil.
B) the slowdown in U.S. imports, due to political pressure.
C) liberal lending policies by U.S. banks to homeowners.
D) the artificial fixing of the currency rate by China.
27) Why did many Japanese firms invest in North America and Europe in the 1970s?
A) to avoid a highly competitive domestic market
B) to exploit high domestic tariff barriers
C) to provide a hedge against unfavorable currency movements and imposition of
trade barriers
D) to take advantage of the removal of all trade barriers
28) Throughout the 1990s, the amount of foreign direct investment directed at both developed
and developing nations increased dramatically. This trend reflects
A) a slowdown in global economic activity.
B) the increasing share of the United States in the total FDI stock.
C) the decline in cross-border flows of foreign direct investment.
D) the increasing internationalization of business corporations.
29) Which country has been the largest recipient of foreign direct investment and, in 2020,
received about $250 billion in inflows?
A) Brazil
B) Russia
C) India
D) China
30) Procter & Gamble is a multinational enterprise (MNE), which is a firm that
A) exports its products to multiple countries.
B) owns business operations in more than one country.
C) does most of its business on the Internet.
D) lists its securities on a public exchange.
31) In the last two decades, Latin American countries such as Brazil, Mexico, and Chile have
A) embraced communist principles.
B) promoted government ownership of enterprises.
C) experienced increasing debt and inflation.
D) welcomed foreign investment.
32) What is a risk associated with globalization?
A) restrictions on competition
B) global financial contagion
C) excessive market regulation
D) differentiation of markets
33) The rise in the number of mini-multinationals means that
A) small businesses are becoming increasingly involved in international trade and
investment.
B) it is increasingly difficult to enter the large multinational market.
C) countries are working together to minimize MNE influence.
D) there is greater state involvement in industry.
34) The downside of increased globalization is
A) global financial contagions are less likely.
B) a severe crisis in one region can affect the entire globe.
C) one nation may become too powerful.
D) the potential for increased exploitation of undeveloped nations by developed nations.
35) If China continues to move toward greater free market reforms it
A) may move from being an industrial superpower to a struggling economy.
B) will likely see a decrease in GDP per capita.
C) may move from a third-world business giant to an industrial superpower.
D) will likely give global market share to Western and Japanese enterprises.
36) To be classified as an MNE, a company must have productive activities in at least ________
countries.
A) two
B) three
C) ten
D) twenty
37) Supporters of globalization maintain that the apparent decline in real wage rates of unskilled
workers
A) is due to technological changes and automation that create greater demand for
skilled workers.
B) is due to the migration of low-wage manufacturing jobs offshore.
C) can be checked by increasing government ownership of enterprises.
D) can be checked by limiting free trade and foreign investment.
38) Several studies published by the Organisation for Economic Co-operation and Development
(OECD) noted that
A) the real household income of unskilled workers in the United States increased more in
comparison to that of skilled workers.
B) in almost all countries real income levels declined over the 20-year period studied.
C) the falling unemployment rates brought gains to low-wage workers and fairly broad-
based wage growth.
D) the gap between the poorest and richest segments of society in some OECD
countries had widened.
39) The trade agreement known as NAFTA was passed only after
A) China agreed to establish a higher minimum wage.
B) the United States agreed to limit the number of jobs that could be outsourced.
C) Mexico committed to tougher enforcement of environmental protection
regulations.
D) Canada committed to establish new limits on FDI.
40) Globalization is criticized because it increases the power of
A) governments to own enterprises.
B) unskilled labor to form labor unions.
C) supranational organizations over nation-states.
D) nation-states to regulate markets and reduce competition.
41) The World Trade Organization has estimated that the developed nations of the world can
raise global economic welfare by $128 billion by
A) removing subsidies given to their agricultural producers.
B) increasing tariff barriers to trade in agriculture.
C) increasing outsourcing of manufacturing processes.
D) reducing defense expenditure.
42) Which factor is viewed by large segments of the population in many countries as a
detrimental effect of globalization?
A) job growth in industries under attack from foreign competitors
B) upward pressure on the wage rates of unskilled workers
C) environmental degradation
D) cultural isolationism of global media and MNEs
43) While the hump-shaped relationship between income levels and pollution levels seems to
hold across a wide range of pollutants, ________ represent an important exception.
A) sulfur dioxide emissions
B) lead concentrations
C) carbon dioxide emissions
D) water quality standards
44) Why has little progress has been made toward the ambitious goals set at the 1992 Earth
Summit in Rio de Janeiro?
A) China has shown a strong appetite to adopt tighter pollution controls.
B) Political cooperation in the U.S. Congress promotes domestic action.
C) There is a culture of denial in the United States.
D) Trade liberalization efforts have not been rolled back.
45) The two largest emitters of carbon dioxide are
A) China and the United States.
B) China and the United Kingdom.
C) Canada and the United States.
D) Mexico and the United States.
46) How would economists characterize the relationship between globalization and poverty?
A) Globalization has improved the lot of the world’s poorer nations which has led to
an overall decrease in poverty.
B) Globalization has caused the gap between rich and poor nations to shrink and poverty
levels to decline.
C) Globalization has caused an increase in poverty as well as an increase in the gap
between rich and poor nations.
D) The movement of labor to developed nations because of globalization has contributed
significantly to the increase in poverty.
47) An international business, unlike a multinational enterprise,
A) needs to have manufacturing units in at least two foreign nations.
B) needs to manufacture products or provide services that target a global market.
C) need not customize its products to the requirements of national markets.
D) need not invest directly in operations in other countries.
48) Which statement is true regarding an international business?
A) An international business needs to invest directly in operations in other countries.
B) An international business needs to have homogenous practices across countries.
C) An international business can be managed in the same way that a domestic business is
managed.
D) An international business must find ways to work within the limits imposed by
government intervention.
49) How does managing an international business differ from managing a domestic business?
A) International managers are more experienced.
B) Countries differ in their cultures and systems.
C) Countries want to do business with their neighbors.
D) Countries want to keep their transactions simple.
50) Which statement is characteristic of an international businesses?
A) All MNEs are international businesses.
B) Only firms that export products are international businesses.
C) Only firms that invest abroad are international businesses.
D) All international businesses are MNEs.
