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55) If China continues to move toward greater free market reforms it
A) may move from industrial superpower to third-world status.
B) will likely see a decrease in GDP per capita.
C) may move from third-world to industrial superpower status.
D) will likely give global market share to Western and Japanese enterprises.
56) To be classified as an MNE, a company must have productive activities in at least
________ countries.
A) two
B) three
C) four
D) twenty
57) 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.
58) A study published in 2011 by the OECD noted that
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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.
59) 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
A) initially the pollution levels remain low.
B) after a while, the pollution levels decrease.
C) the pollution levels also rise in proportion to the economic growth.
D) there is increasing industrialization, which leads to greater pollution.
60) 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.
61) Globalization is criticized because it increases the power of
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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.
62) 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.
63) Which of the following is viewed by large segments of the population in many countries
as a detrimental effect of antiglobalization?
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
64) 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
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65) Based on several studies, the data suggest that real wages
A) for unskilled workers have decreased while real wages for skilled workers have
increased.
B) for both skilled and unskilled labor have decreased.
C) for both skilled and unskilled labor have increased.
D) for unskilled workers have increased while real wages for skilled worker have
decreased.
66) Which of the following is a reason that 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.
67) 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.
68) In 2000, the United Nations established the ________ to reduce the number of people
who live in extreme poverty by 2015.
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A) Millennium Development Goals
B) Twenty-First Century Goals
C) Globalization Rejuvenation Goals
D) U.N. Humanistic Goals
69) Which of the following is true of HIPCs?
A) About 100 nations fall in this category.
B) The average debt burden has never been more than 75 percent of the value of the
HIPC’s economy.
C) Servicing heavy debt leaves HIPCs with little left to invest in public infrastructure.
D) The annual cost of serving debt consumes about 30 percent of HIPC export earnings.
70) Which of the following is true of the supporters of debt relief for HIPCs?
A) They argue that free trade alone is sufficient to bring HIPCs out of poverty.
B) They argue that new democratic governments should be forced to honor debts
incurred by previous corrupt predecessors.
C) They include Bono, the Dalai Lama, and Jeffrey Sachs among their ranks.
D) They are working against the policies of the IMF and World Bank.
71) 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.
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72) Issy’s Ice Cream is an international business. As such, it
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) invests in international trade or investment.
73) Which of the following statements 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.
74) 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.
75) Which of the following is true regarding international businesses?
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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.
76) Managing an international business is different from managing a purely domestic
business for which of the following reasons?
A) Countries prefer to keep business transactions between domestic partners.
B) The range of problems confronted is wider and more complex.
C) International businesses have an added layer of U.N. regulations.
D) International transactions involve exchanging currencies through each country’s
treasury.
77) Since Wally’s Whistles is a medium-size business, it wouldn’t benefit from globalization.
⊚ true
⊚ false
78) Global supply chain and business arbitrage can help companies lower their overall cost
structure or improve the quality or functionality of their product offering.
⊚ true
⊚ false
79) Johann’s business does not make consumer products; therefore, it would not be likely to
participate in global markets.
⊚ true
⊚ false
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80) Outsourcing is a process that is limited to manufacturing enterprises.
⊚ true
⊚ false
81) 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.
⊚ true
⊚ false
82) When Cyprus had a financial crisis, it went to the World Bank, known as the lender of
last resort, to bail it out.
⊚ true
⊚ false
83) 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.
⊚ true
⊚ false
84) The Uruguay Round, finalized in December 1993, enhanced protection for patents,
trademarks, and copyrights.
⊚ true
⊚ false
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85) “Beggar thy neighbor” retaliatory trade policies involved countries progressively
increasing trade barriers against each other, which contributed to the Great Depression of the
1930s.
⊚ true
⊚ false
86) Rivers Inc., a U.S.-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 foreign direct investment.
⊚ true
⊚ false
87) World Bank gives aid of $100 million to Kenya for creating rural health care facilities.
This is an example of foreign direct investment.
⊚ true
⊚ false
88) The lowering of barriers to international trade enables firms to compete globally and
view the world, rather than a single country, as their market.
⊚ true
⊚ false
89) According to WTO data, the volume of global trade has grown faster than the world
economy since 1950.
⊚ true
⊚ false
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90) The cost of microprocessors continues to fall, while their power increases. This statement
supports the predictions made by Moore’s Law.
⊚ true
⊚ false
91) Foreign direct investment by non-U.S. firms increased because they wanted to disperse
production activities to optimal locations and to build a direct presence in major foreign markets.
⊚ true
⊚ false
92) A current trend in international business is the decline of medium-sized and small
multinationals, known as mini-multinationals.
⊚ true
⊚ false
93) Because Russia has shown signs of shifting back toward greater state involvement in
economic activity and authoritarian government, doing business in Russia is considered riskier.
⊚ true
⊚ false
94) According to globalization critics, the decline in unskilled wage rates is due to the
migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for
unskilled workers.
⊚ true
⊚ false
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95) Evidence suggests that technological change and automation has had a bigger impact than
globalization on the declining share of national income enjoyed by unskilled labor.
⊚ true
⊚ false
96) According to supporters of free trade, as countries become more integrated into global
economy and trade, they are more likely to enforce stricter environmental and labor regulations.
⊚ true
⊚ false
97) According to critics of globalization, today’s interdependent global economy increases a
nation’s exposure to global risks.
⊚ true
⊚ false
98) According to supporters of debt relief, new democratic governments in poor nations
should not be forced to honor debts incurred by corrupt and dictatorial predecessors.
⊚ true
⊚ false
99) A firm needs to become a multinational enterprise to engage in international business.
⊚ true
⊚ false
100) Managing an international business is quite similar to managing a domestic business.
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⊚ true
⊚ false
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Answer Key
Test name: chapter 1
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