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c1 Key
1. As a result of globalization, we have been moving toward a world in which national economies are relatively
self-contained entities.
2. By offering the same basic product worldwide, firms help to create a global market.
3. As a result of globalization, companies rarely need to customize marketing strategies, product features, and
operating practices in different countries.
4. Substantial impediments, such as barriers to foreign direct investment, make it difficult for firms to achieve
the optimal dispersion of their productive activities to locations around the globe.
5. The World Trade Organization, the International Monetary Fund and its sister institution the World Bank,
and the United Nations were all created by voluntary agreement between individual nation-states.
6. The WTO is 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.
7. The IMF is less controversial than its sister institution, the World Bank.
8. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home
country.
9. After World War II, the advanced nations of the West committed themselves to increasing barriers to the free
flow of goods, services, and capital between nations.
10. The Uruguay Round extended GATT to cover services as well as manufactured goods.
11. The lowering of trade and investment barriers allows firms to base production at the optimal location for
that activity.
12. As a result of international trade, the economies of the world's nation-states are becoming less intertwined.
13. The globalization of markets and production and the resulting growth of world trade, foreign direct
investment, and imports all imply that firms are finding it easier to protect themselves from attack by foreign
competitors.
14. Containerization has revolutionized the transportation business, significantly lowering the costs of shipping
goods over long distances.
15. The real costs of information processing and communication have fallen dramatically in the past two
decades.
16. The United States accounted for a significantly larger share of the world economy in 2012 than it did in the
1960s.
17. Beginning in the 1970s, European and Japanese firms began to shift labor-intensive manufacturing
operations from developing nations to their home countries where labor costs were lower.
18. The stock of foreign direct investment refers to the total cumulative value of foreign investments in a
country.
19. Throughout the 1990s, the amount of investment directed at both developed and developing nations
increased dramatically.
20. Although most international trade and investment are still conducted by large firms, many medium-size and
small businesses are becoming increasingly involved in international trade and investment.
21. Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic
policies and free market economies.
22. The move toward a global economy has strengthened the adoption of conservative economic policies by
developing nations.
23. According to many influential economists, the increase in international trade and cross-border investment
will result in an increase in the prices of goods and services.
24. It is possible that economic growth in developed nations has offset the fall in the share of national income
enjoyed by unskilled workers, raising their living standards.
25. The growing income inequality is a result of the wages for skilled workers being discounted.
26. In general, as countries get richer, they enact tougher environmental and labor regulations.
27. Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by pursuing retaliatory
trade policies rather than free trade policies.
28. Managers in an international business must find ways to work around the limits imposed by specific
governmental institutions.
29. Despite all the talk about the emerging global village, differences between countries such as cultures and
political systems are very profound and enduring.
30. As a result of globalization, international businesses can avoid the haggle of currency exchanges during
cross-border transactions.
31. Which of the following has been reduced as a result of globalization?
32. What is the shift toward a more integrated and interdependent world economy called?
33. Automobile companies promote different car models in different countries depending on a range of factors
such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This
most likely demonstrates that:
34. Which of the following statements best supports the claim that greater uniformity replaces diversity in the
context of global markets?
35. Which of the following 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 such as labor, energy, land, and capital?
36. Which of the following best illustrates the globalization of production?
37. West Electronic Corporation sources goods and services for its electronics products from different locations
around the globe in an attempt to take advantage of differences in the cost and quality of labor and land. This
practice demonstrates the:
38. Early outsourcing efforts were primarily confined to:
39. Which of the following services CANNOT be outsourced to foreign nations?
40. Which of the following was established after the Uruguay Round to police the international trading system?
41. Why was the World Bank set up?
42. Which of the following is an argument put forth by critics of the IMF?
43. According to the UN Charter, one of the four purposes of the UN is to:
44. Who, along with representatives from the European Union and the European Central Bank, represent the 19
largest economies in the world on the G20?
45. Which of the following is a macro factor underlying the trend toward greater globalization?
46. Which of the following best exemplifies foreign direct investment (FDI)?
47. Michelle, an Italian fashion designer, sells her merchandise by exporting them to the United States, United
Kingdom, and Brazil. According to this information, Michelle is most likely involved in:
48. For foreign direct investment (FDI) to occur, a firm should primarily:
49. The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World
War II, was to:
