37.
Critics of globalization suggest that over the last century, the gap between
the rich and poor nations of the world has shrunken.
FALSE
Critics of globalization argue that despite the supposed benefits associated
with free trade and investment, over the past hundred years or so the gap
between the rich and poor nations of the world has gotten wider.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
38.
Supporters of debt relief argue that new democratic governments in poor
nations should not be forced to honor debts incurred by corrupt and
dictatorial predecessors.
TRUE
Supporters of debt relief argue that new democratic governments in poor
nations should not be forced to honor debts that were incurred and
mismanaged long ago by their corrupt and dictatorial predecessors.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
39.
A firm does not have to become a multinational enterprise to engage in
international business.
TRUE
An international business is any firm that engages in international trade or
investment. A firm does not have to become a multinational enterprise,
investing directly in operations in other countries, to engage in international
business, although multinational enterprises are international businesses.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges for
business managers.
Topic: Managing in the Global Marketplace
40.
Differences between countries require that an international business vary
its practices country by country.
TRUE
As their organizations increasingly engage in cross-border trade and
investment, managers need to recognize that the task of managing an
international business differs from that of managing a purely domestic
business in many ways. Differences between countries require that an
international business vary its practices country by country.
Learning Objective: 01-05 Understand how the process of globalization is creating opportunities and challenges for
business managers.
Topic: Managing in the Global Marketplace
Multiple Choice Questions
41.
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 _____.
A.
regulating markets
B.
privatizing state-owned enterprises
C.
decreasing competition
D.
Since the collapse of communism at the end of the 1980s, the pendulum of
public policy in nation after nation has swung toward the free market end of
the economic spectrum. Regulatory and administrative barriers to doing
Topic: Introduction
42.
Which of the following is a consequence of globalization?
A.
Decreasing interdependence between national economies
B.
Increasing outsourcing of services
C.
Differentiation of material culture
D.
Increase in barriers to cross-border trade
The process of outsourcing legal services from developed nations to lower-
cost locations is indicative of what is occurring in today’s global economy.
Because of rapid advances in telecommunications and the removal of
barriers to cross-border trade and investment, such outsourcing is
becoming increasingly common.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: Introduction
43.
Which of the following has enabled globalization of markets?
A.
Differentiation amongst national markets
B.
Falling barriers to cross border trade
C.
Reduced homogeneity of material culture across the world
D.
Increased government ownership of factors of production
The globalization of markets refers to the merging of historically distinct
and separate national markets into one huge global marketplace. Falling
barriers to cross-border trade have made it easier to sell internationally.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
44.
Which of the following factors hinders globalization of consumer goods
market?
A.
National differences in tastes and preferences
B.
Higher production costs in developed nations
C.
Homogenization of material culture
D.
Increasing outsourcing of goods and services
The most global markets currently are not markets for consumer products—
where national differences in tastes and preferences are still often
important enough to act as a brake on globalization—but markets for
industrial goods and materials that serve a universal need the world over.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
45.
Globalization of markets results in markets becoming _____.
A.
less interdependent
B.
less diverse
C.
more protected
D.
less competitive
As markets become global, greater uniformity replaces diversity. In an
increasing number of industries, it is no longer meaningful to talk about “the
German market,” “the American market,” “the Brazilian market,” or “the
Japanese market”; for many firms there is only the global market.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
46.
A U.S. Investment firm, Fin-Smart, set up a customer service call center in
India to take advantage of the lower labor costs. This is called _____.
A.
homogenizing markets
B.
vertical integration
C.
outsourcing
D.
horizontal integration
Early outsourcing efforts were primarily confined to manufacturing
activities; increasingly, however, companies are taking advantage of modern
communications technology, particularly the Internet, to outsource service
activities to low-cost producers in other nations.
AACSB: Analytic
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
47.
Early outsourcing efforts were primarily confined to _____.
A.
health care
B.
service activities
C.
technological research
D.
manufacturing activities
Early outsourcing efforts were primarily confined to manufacturing
activities; increasingly, however, companies are taking advantage of modern
communications technology, particularly the Internet, to outsource service
activities to low-cost producers in other nations.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
48.
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 tariffs on imports of manufactured goods
B.
Government regulations
C.
Issues associated with economic and political risk
D.
Barriers to foreign direct investment
Substantial impediments still make it difficult for firms to achieve the
optimal dispersion of their productive activities to locations around the
globe. These impediments include formal and informal barriers to trade
between countries, barriers to foreign direct investment, transportation
costs, and issues associated with economic and political risk.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
49.
The General Agreement on Tariffs and Trade (GATT) was responsible for
_____.
A.
protecting government owned enterprises
B.
policing the global marketplace
C.
limiting nuclear testing
D.
promoting environment friendly technology
As markets globalize and an increasing proportion of business activity
transcends national borders, institutions are needed to help manage,
regulate, and police the global marketplace, and to promote the
establishment of multinational treaties to govern the global business
system. Over the past half century, a number of important global institutions
have been created to help perform these functions, including the General
Agreement on Tariffs and Trade (GATT).
AACSB: Analytic
Blooms: Remember
50.
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
The World Trade Organization 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 WTO member states. As of 2011, 154 nations
that collectively accounted for 97 percent of world trade were WTO
members, thereby giving the organization enormous scope and influence.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
51.
The World Trade Organization promotes _____.
A.
lowering of barriers to cross-border trade and investment
B.
infrastructural development in poor nations through low-interest loans
C.
state ownership of major enterprises
D.
regulation of national economies
The WTO is also responsible for facilitating the establishment of additional
multinational agreements between WTO member states. Over its entire
history, and that of the GATT before it, the WTO has promoted the lowering
of barriers to cross-border trade and investment.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
52.
Which of the following is true about the International Monetary Fund?
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.
The IMF is often seen as the lender of last resort to nation-states whose
economies are in turmoil and whose currencies are losing value against
those of other nations. During the past two decades, for example, the IMF
has lent money to the governments of troubled states, including Argentina,
Indonesia, Mexico, Russia, South Korea, Thailand, and Turkey.
AACSB: Analytic
Blooms: Remember
53.
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.
G20tx
D.
World Bank
The United Nations was established on October 24, 1945, by 51 countries
committed to preserving peace through international cooperation and
collective security. Today nearly every nation in the world belongs to the
United Nations; membership now totals 191 countries.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
54.
The G20tx 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
The G20tx was established in 1999 to formulate a coordinated policy
response to financial crises in developing nations. The G20 comprises the
finance ministers and central bank governors of the 19 largest economies in
the world, plus representatives from the European Union and the European
Central Bank.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
55.
_____ 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
International trade occurs when a firm exports goods or services to
consumers in another country.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
56.
In late 2001, the WTO launched a new round of talks in Doha aimed at:
A.
helping member states to cope with financial crisis.
B.
further liberalization of the global trade and investment framework.
C.
protecting national economies from global competition.
D.
promoting higher standards of living in all member states.
In late 2001, the WTO launched a new round of talks aimed at further
liberalizing the global trade and investment framework. The Doha agenda
includes cutting tariffs on industrial goods, services, and agricultural
products; phasing out subsidies to agricultural producers; reducing barriers
to cross-border investment; and limiting the use of antidumping laws.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
57.
Which of the following is NOT included in world merchandise trade?
A.
Manufactured goods
B.
Agricultural goods
C.
Services
D.
Mining products
From 1970 to 2010, the volume of world merchandise trade expanded more
than 30-fold, outstripping the expansion of world production, which grew
close to 10 times in real terms. World merchandise trade includes trade in
manufactured goods, agricultural goods, and mining products, but not
services.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
58.
_____ have/has the most to gain from reductions in agricultural tariffs and
subsidies that are a part of the Doha agenda.
A.
The world’s developed nations
B.
The world’s poorer nations
C.
European nations
D.
The United States
The world’s poorer nations have the most to gain from any reduction in
agricultural tariffs and subsidies; such reforms would give them access to
the markets of the developed world.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization