47) While the lowering of trade barriers made globalization of markets and production a
theoretical possibility, what has made it a tangible reality?
A) the advances in communication, information processing, and transportation technologies
B) the rise of communism and the need for independent economies on a global scale
C) the increasing diversity in consumer tastes and preferences worldwide
D) the increasing differences in the material culture the world over
E) the decreasing significance of the World Trade Organization
48) Gerald bought his son, David, a computer two years ago. Recently, he decided to buy his
daughter, Julian, a computer of her own. When applying Moore’s Law to the two-year gap between
the purchase of the computers, 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.
49) Sharron purchased a computer for $500 in 2018. Compared to the $900 computer that she
purchased in 2011, the new one seems better in terms of the price she has paid and the power of the
microprocessor technology. This is best explained by
A) product liability.
B) property rights.
C) Moore’s law.
D) purchasing power parity.
E) sustainable strategies.
50) Connor assured his foreign counterpart that the items would be shipped from St. Louis,
Missouri, and arrive in about ten days to Lisbon, Portugal because the parts would stay in the same
packing crate and be lifted directly from the truck onto the airplane rather than having to be
repackaged. What innovation is Connor referring to?
A) logistics
B) communication
C) containerization
D) sustainability
E) customization
51) What country has seen a relative decline in its share of world output between 1960 and 2018?
A) United States
B) Brazil
C) Thailand
D) China
E) South Korea
52) Which statement reflects 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 United States 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 globe—the centrally planned economies of the communist world—is
off-limits to Western international businesses.
53) The change in the United States’ position as a dominant industrial power is characterized as a
relative decline because it
A) is the direct result of an isolationism policy.
B) doesn’t account for entrepreneurial activity.
C) actually increased compared to some other developed nations.
D) accounts for the production of goods and services.
E) reflects the faster economic growth of several other economies.
54) A positive economic change from 1960 to 2018 was seen in the
A) growth of the centrally planned economies of the communist world.
B) U.S. position in the world economy and world trade picture.
C) share of world output enjoyed by rich industrialized countries such as Great Britain, Germany,
and France.
D) share of world output accounted for by developing nations.
E) prevalence of independent and self-contained national economies.
55) Due to the changing economic geography, many of tomorrow’s economic opportunities are
most likely to be found in the
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.
56) When trade barriers began to fall, what was the motivation for much of the foreign direct
investment by non-U.S. firms?
A) desire to disperse production activities to optimal locations
B) need to suppress emerging economies such as China, India, and Brazil
C) demand for skilled workers in foreign nations
D) lack of adequate environmental regulations
E) establishment of multinational treaties
57) The stock of foreign direct investment refers to
A) the purchasing power associated with current investments.
B) the ability to leverage FDI when negotiating with a foreign entity.
C) the total cumulative value of foreign investments as a percentage of a country’s GDP.
D) the value of foreign investment when accounting for tariffs and other government-imposed
costs.
E) the number of foreign investments a company has compared to the number of domestic
investments.
58) Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two
countries. Silver Fire Electric is what type of enterprise?
A) state-owned
B) universal
C) private
D) multinational
E) public
59) Kellen’s Karpets is headquartered in Las Vegas, Nevada, and has production plants in Mexico
and Indonesia. Kellen’s Karpets is an example of
A) an acquisition.
B) a multinational enterprise.
C) a factor endowment.
D) a global trader.
E) a domestic company.
60) What are mini-multinationals?
A) multinational firms from relatively small countries in terms of area
B) multinationals from the developing nations of the world
C) multinational firms that operate in only one foreign country
D) medium- and small-size multinationals
E) subsidiaries of large multinationals in foreign countries
61) One advancement that has lowered the barriers many small firms face when building
international sales is
A) containerization.
B) JIT inventory systems.
C) government-imposed quotas.
D) air and railway systems.
E) the Internet.
62) Royal Teas, a U.K.-based company employing just 30 people worldwide, generates $1.5
million in revenues of which 60 percent comes from exports to Asian countries. Royal Teas is
most likely classified as a
A) large domestic firm.
B) mini-multinational firm.
C) greenfield firm.
D) foreign firm.
E) multinational giant.
63) What is acting as a deterrent for foreign firms willing to do business with former communist
nations of Eastern Europe and central Asia?
A) high levels of economic development in these countries
B) signs of growing unrest and totalitarian tendencies seen in these countries
C) strong commitment to market-based economic systems seen in these countries
D) collapse of communism in these countries
E) low returns involved in doing business in these countries
64) What is an accurate characterization of the role of international business investments in Latin
America today?
A) Foreign investment by Western international business is frowned upon.
B) Debt and inflation are down and foreign investment is welcomed.
C) Latin America is plagued with low growth, high debt, and hyperinflation which discourages
investment.
D) Latin American governments are purchasing businesses from private investors.
E) There are fewer opportunities for investment because of communist rule.
65) What country in Latin America has seen a significant expansion in their economy in the past
two decades?
A) Argentina
B) Peru
C) Chile
D) Paraguay
E) Panama
66) Which statement is a general implication 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.
67) An argument in support of the falling barriers to international trade and investment is that the
falling barriers
A) prohibit countries from specializing in the production of goods and services.
B) drive the global economy toward greater prosperity.
C) reduce the need to export jobs overseas.
D) increase the bargaining power of business firms by decreasing the incomes of consumers.
E) reduce attacks from foreign competitors.
68) Opponents to globalization believe that when U.S. companies outsource service activities,
such as call centers, to a lower-cost foreign supplier, it results in
A) higher living standards in those countries that “export” the jobs.
B) higher unemployment in wealthy advanced economies such as the United States.
C) an increase in the income levels in those nations that “export” the jobs.
D) lower standards of living in those countries to which the jobs are exported.
E) reduced specialization in the production of goods and services.
69) According to globalization opponents, what has increased in wealthy advanced economies as a
result of globalization?
A) unemployment
B) price of goods and services
C) demand for unskilled workers
D) standard of living
E) income equality
70) Those who support globalization recognize that while some concessions occur during the
process of globalization, ultimately, it still works because
A) all retaliatory trade policies have been eliminated.
B) the benefits outweigh the costs.
C) democratic governments follow this pattern.
D) the costs affect very few people.
E) nations need to import goods they are efficient at producing.
71) Globalization critics argue that the decline in unskilled wage rates in advanced economies is
due to the
A) migration of low-wage manufacturing jobs offshore.
B) technology-induced shift toward jobs that require significant education and skills.
C) increased supply of highly skilled workers.
D) increasing demand for unskilled workers.
E) reducing national differences in the cost of labor between developed and developing nations.
72) 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.
73) Clean Chemical Corp. recently moved its operations from Houston, Texas, to Somalia. The
decision to move was the result of new federal regulations regarding clean air standards that all
chemical corporations are subjected to. A critic of globalization would say this example
demonstrates what concern?
A) Free trade discourages firms from advanced nations to move manufacturing facilities to less
developed countries.
B) Facilities in advanced nations are moving to less developed countries that have lower
environmental regulations.
C) Manufacturing enterprises are put at a competitive disadvantage by moving their production
facilities to nations that do not have burdensome regulations.
D) As countries get richer, they relax their environmental and labor regulations.
E) More countries are working to meet the strict environmental standards set by the U.S.
government.
74) The North American Free Trade Agreement (NAFTA) was formed in 1994 among
A) Canada, Mexico, and the United States.
B) the United States, Brazil, and Argentina.
C) Canada, Argentina, and Mexico.
D) Colombia, Venezuela, and Brazil.
E) Uruguay, Colombia, and Costa Rica.