Chapter 01 Globalization
True / False Questions
1.
The shift toward a more integrated and interdependent world economy is
referred to as globalization.
TRUE
Globalization refers to the shift toward a more integrated and
interdependent world economy. It has several facets, including the
globalization of markets and the globalization of production.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
2.
A company does not need a large size to facilitate, and benefit from, the
globalization of markets.
TRUE
A company does not have to be the size of multinational giants to facilitate,
and benefit from, the globalization of markets. In the United States, for
example, nearly 90 percent of firms that export are small businesses
employing less than 100 people, and their share of total U.S. exports has
grown steadily over the past decade to now exceed 20 percent.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
3.
Companies hope to lower their overall cost structure or improve the quality
or functionality of their product offering through globalization of production.
TRUE
The globalization of production refers to the sourcing of goods and services
from locations around the globe to take advantage of national differences in
the cost and quality of factors of production. By doing this, companies hope
to lower their overall cost structure or improve the quality or functionality of
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
4.
The most global markets currently are markets for consumer products.
FALSE
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?
5.
Outsourcing is a process that is limited to manufacturing enterprises.
FALSE
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.
Topic: What Is Globalization?
6.
The health care sector in the U.S. cannot avail the benefits of outsourcing
to low-cost producers in other nations because of the nature of the work.
FALSE
In 2008 some 34,000 Filipinos were transcribing American medical files.
Some estimates suggest the outsourcing of many administrative procedures
in health care, such as customer service and claims processing, could
reduce health care costs in America by as much as $70 billion.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: What Is Globalization?
7.
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.
FALSE
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. The World Bank was set up
to promote economic development.
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
8.
The World Bank is known as the lender of the last resort.
FALSE
The IMF was established to maintain order in the international monetary
system. It 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.
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
9.
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
Although the UN is perhaps best known for its peacekeeping role, one of
the organization’s central mandates is the promotion of higher standards of
living, full employment, and conditions of economic and social progress and
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Understand what is meant by the term globalization.
Topic: The Emergence of Global Institutions
10.
In 2008 and 2009, the GATT became the forum though which major nations
attempted to launch a coordinated policy response to the global financial
crisis, which started in America.
FALSE
Originally, the G20tx was established to formulate a coordinated policy
response to financial crises in developing nations. In 2008 and 2009 it
became the forum though which major nations attempted to launch a
coordinated policy response to the global financial crisis that started in
America and then rapidly spread around the world.
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
11.
The Uruguay Round, finalized in December 1993, reduced protection for
patents, trademarks, and copyrights.
FALSE
Under the umbrella of GATT, the most recent negotiations to be completed,
known as the Uruguay Round, were finalized in December 1993. The
Uruguay Round provided enhanced protection for patents, trademarks, and
copyrights.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
12.
“Beggar thy neighbor” retaliatory trade policies involved countries
progressively lowering trade barriers against each other, which contributed
to the Great Depression of the 1930s.
FALSE
The typical aim of tariffs on imports of manufactured goods was to protect
domestic industries from foreign competition. One consequence, however,
was “beggar thy neighbor” retaliatory trade policies, with countries
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
13.
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
Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
14.
World Bank gives an aid of 100 million dollars to Kenya for creating rural
health care facilities. This is an example of foreign direct investment.
FALSE
Foreign direct investment (FDI) occurs when a firm invests resources in
business activities outside its home country.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
15.
The lowering of barriers to international trade enables firms to view the
world, rather than a single country, as their market.
TRUE
The lowering of barriers to international trade enables firms to view the
world, rather than a single country, as their market.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
16.
According to WTO data, the volume of world merchandise trade has grown
faster than the world economy since 1950.
TRUE
According to WTO data, the volume of world merchandise trade has grown
faster than the world economy since 1950.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
17.
The expansion of world trade implies that nations are becoming less
dependent on each other for important goods and services.
FALSE
The economies of the world’s nation-states are becoming more intertwined.
As trade expands, nations are becoming increasingly dependent on each
other for important goods and services.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
18.
Over the past 30 years the flow of FDI has accelerated faster than the
growth in world trade and world output.
TRUE
In general, over the past 30 years the flow of FDI has accelerated faster
than the growth in world trade and world output. For example, between
1992 and 2008, the total flow of FDI from all countries increased more than
eightfold while world trade by value grew by some 150 percent and world
output by around 45 percent.
19.
The globalization of markets and production and the resulting growth of
world trade, foreign direct investment, and imports all imply that firms are
finding their home markets protected from foreign competitors.
FALSE
The globalization of markets and production and the resulting growth of
world trade, foreign direct investment, and imports all imply that firms are
finding their home markets under attack from foreign competitors.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
20.
The cost of microprocessors continues to fall, while their power increases.
This statement supports the predictions made by Moore’s Law.
TRUE
The cost of microprocessors continues to fall, while their power increases
(a phenomenon known as Moore’s Law, which predicts that the power of
microprocessor technology doubles and its cost of production falls in half
every 18 months).
Topic: Drivers of Globalization
21.
Efficiency gains associated with containerization have caused
transportation costs to fall dramatically.
TRUE
Containerization has revolutionized the transportation business,
significantly lowering the costs of shipping goods over long distances.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
22.
Low-cost global communications networks such as the World Wide Web are
helping to create electronic global marketplaces.
TRUE
Low-cost global communications networks such as the World Wide Web are
helping to create electronic global marketplaces.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
23.
Globalization of markets has resulted in greater differentiation of consumer
tastes and preferences.
FALSE
Globalization of markets has reduced the cultural distance between
countries and is bringing about some convergence of consumer tastes and
preferences. At the same time, global communication networks and global
media are creating a worldwide culture.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
24.
In the early 1960s, the United States was by far the world’s dominant
industrial power. However by 2009, it lost its dominant position and now, is
no longer the world’s largest industrial power.
FALSE
In the early 1960s, the United States was still by far the world’s dominant
industrial power. In 1963 the United States accounted for 40.3 percent of
world economic activity, measured by gross domestic product (GDP). By
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
25.
Non-U.S. firms increasingly began to invest across national borders
because they wanted to disperse production activities to optimal locations
and to build a direct presence in major foreign markets.
TRUE
As the barriers to the free flow of goods, services, and capital fell, and as
other countries increased their shares of world output, non-U.S. firms
increasingly began to invest across national borders. The motivation for
much of this foreign direct investment by non-U.S. firms was the desire to
disperse production activities to optimal locations and to build a direct
presence in major foreign markets.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
26.
A multinational enterprise (MNE) is any business that exports or imports
products from other countries.
FALSE
A multinational enterprise (MNE) is any business that has productive
activities in two or more countries.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
27.
A current trend in international business is the decline of medium-sized and
small multinationals, known as mini-multinationals.
FALSE
Since the 1960s, two notable trends in the demographics of the
multinational enterprise have been (1) the rise of non-U.S. multinationals
and (2) the growth of mini-multinationals.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
28.
The globalization of the world economy has resulted in a relative increase in
the dominance of U.S. firms in the global marketplace.
FALSE
By 2008 some 19 of the world’s 100 largest nonfinancial multinationals were
now U.S. enterprises; 13 were French; 13, German; 14, British; and 10,
Japanese. The globalization of the world economy has resulted in a relative
decline in the dominance of U.S. firms in the global marketplace.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
29.
Doing business in Russia involves risks because the country has shown
signs of shifting back toward greater state involvement in economic activity
and authoritarian government.
TRUE
Disturbing signs of growing unrest and totalitarian tendencies continue to
be seen in several Eastern European and Central Asian states, including
Russia, which has shown signs of shifting back toward greater state
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
30.
Current trends indicate the world is moving toward an economic system
that is more favorable for international business.
TRUE
Over the next few decades, countries such as the Czech Republic, Mexico,
Poland, Brazil, China, India, and South Africa may build powerful market-
oriented economies. Current trends indicate the world is moving toward an
economic system that is more favorable for international business.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
31.
Globalization reduces the risks of global financial contagion.
FALSE
Even from a purely economic perspective, globalization is not all good. The
opportunities for doing business in a global economy may be significantly
enhanced, but as we saw in 1997-1998, the risks associated with global
financial contagion are also greater.
Difficulty: 2 Medium
Learning Objective: 01-03 Describe the changing nature of the global economy.
Topic: The Changing Demographics of the Global Economy
32.
Globalization critics argue that 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
Globalization critics argue that 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.
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
33.
Evidence suggests that technological change has had a bigger impact than
globalization on the declining share of national income enjoyed by labor.
TRUE
Evidence suggests that technological change has had a bigger impact than
globalization on the declining share of national income enjoyed by labor.
AACSB: Analytic
Blooms: Remember
Topic: The Globalization Debate
34.
Recent evidence indicates that the solution to the problem of stagnant
incomes among the unskilled is to be found in increasing government
regulation of markets.
FALSE
Evidence suggests that technological change has had a bigger impact than
globalization on the declining share of national income enjoyed by labor.
This suggests that a solution to the problem of slow real income growth
among the unskilled is to be found in increasing society’s investment in
education to reduce the supply of unskilled workers.
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
35.
According to supporters of free trade, as countries get richer they commit
greater violation of environmental and labor regulations.
FALSE
Supporters of free trade and greater globalization argue that tougher
environmental regulations and stricter labor standards go hand in hand with
economic progress. In general, as countries get richer, they enact tougher
environmental and labor regulations.
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
36.
According to critics of globalization, today’s interdependent global economy
limits a nation’s national sovereignty.
TRUE
A concern voiced by critics of globalization is that today’s increasingly
interdependent global economy shifts economic power away from national
governments and toward supranational organizations such as the World
Trade Organization, the European Union, and the United Nations.
AACSB: Analytic