59.
Which of the following is NOT a consequence of the reduction in trade
barriers and restrictions on FDI since 1950?
A.
Firms are dispersing parts of their production process to global locations
to drive down production costs and increase product quality.
B.
The economies of the world’s nation states are becoming more
intertwined.
C.
Nations are becoming more independent of each other for important
goods and services.
D.
The world has become significantly wealthier since 1950.
More firms are dispersing parts of their production process to different
locations around the globe. 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. The
world has become significantly wealthier since 1950.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
60.
The financial crisis in the U.S. in 2009 was triggered by _____.
A.
the global hike in the price of crude oil
B.
C.
the problems in the U.S. subprime mortgage lending market
D.
the artificial fixing of currency rate by China
In 2009 the global economy contracted by 2.3 percent as the global financial
crisis that began with problems in the U.S. subprime mortgage lending
market reverberated around the world. The volume of merchandised trade
dropped by 12.2 percent in 2009, the largest such decline since World War
II.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
61.
_____ predicts that the power of microprocessor technology doubles and its
cost of production falls in half every 18 months.
A.
Keynes’s Law
B.
Say’s Law
C.
Moore’s Law
D.
Sullivan Principles
Moore’s Law, which predicts that the power of microprocessor technology
doubles and its cost of production falls in half every 18 months.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
62.
Containerization allows:
A.
reduction of the time needed to get from one location to another.
B.
simplification of transshipment from one mode of transport to another.
C.
buyers and sellers to find each other easily.
D.
enterprises to coordinate and control a globally dispersed production
system.
The introduction of containerization simplifies transshipment from one
mode of transport to another. Before the advent of containerization, moving
goods from one mode of transport to another was very labor intensive,
lengthy, and costly.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Recognize the main drivers of globalization.
Topic: Drivers of Globalization
63.
The relative decline of the United States in the share of world output and
world exports reflects _____.
A.
an increase in the barriers to foreign trade in the U.S.
B.
the deepening of the global financial crisis
C.
the reduced industrialization in developing nations
D.
the growth in the economic development of the world economy
The relative decline of the United States reflects the growing economic
development and industrialization of the world economy, as opposed to any
absolute decline in the health of the U.S. economy.
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
64.
In the 1970s, many Japanese firms invested in North America and Europe:
A.
to avoid a highly competitive domestic market.
B.
to exploit high domestic tariff barriers.
C.
as a hedge against unfavorable currency movements.
D.
to take advantage of low labor costs.
Beginning in the 1970s, European and Japanese firms began to shift labor-
intensive manufacturing operations from their home markets to developing
nations where labor costs were lower. In addition, many Japanese firms
invested in North America and Europe—often as a hedge against
unfavorable currency movements and the possible imposition of trade
barriers.
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
65.
What is the total cumulative value of foreign investments best referred to
as?
A.
Accumulation of foreign shares
B.
Portfolio investments
C.
Stock of foreign direct investments
D.
Stock market investments
The stock of foreign direct investment refers to the total cumulative value of
foreign investments.
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
66.
Throughout the 1990s, the amount of foreign direct investment directed at
both developed and developing nations increased dramatically. This trend
reflects:
A.
a slowdown in global economic activity.
B.
the increasing share of the U.S. in the total FDI stock.
C.
the decline in cross-border flows of foreign direct investment.
D.
the increasing internationalization of business corporations.
Throughout the 1990s, the amount of investment directed at both developed
and developing nations increased dramatically, a trend that reflects the
increasing internationalization of business corporations.
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
67.
Which of the following countries has been the largest recipient of foreign
direct investment and received about $60 billion to $100 billion a year in
inflows in 2004-2009?
A.
Brazil
B.
Russia
C.
India
D.
China
Among developing nations, the largest recipient of foreign direct investment
has been China, which in 2004-2009 received $60 billion to $100 billion a
year in inflows.
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
68.
A multinational enterprise (MNE) is a firm that _____.
A.
exports its products to multiple countries
B.
has production units in more than two countries
C.
does most of its business on the Internet
D.
lists its securities on a public exchange
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
69.
Which of these statements pertaining to cross-border FDI flows is true?
A.
There was a growth of FDI between 2004 and 2007.
B.
A slump in FDI from 1998 to 2000 was followed by a surge from 2001 to
2003.
C.
Among developing nations, the largest recipient of FDI has been Russia.
D.
The dramatic increase in FDI reflects the decreasing internationalization
of business corporations.
A surge in foreign direct investment from 1998 to 2000 was followed by a
slump from 2001 to 2003. However, the growth of foreign direct investment
resumed in 2004 and continued through 2007, when it hit record levels, only
to slow again in 2008 and 2009 as the global financial crisis took hold.
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
70.
Since the 1960s, which of the following has been a notable trend in the
demographics of the multinational enterprise?
A.
The decline of multinational companies in the manufacturing sector
B.
The growth of government-owned multinational enterprises
C.
The decline of non-U.S. multinationals
D.
The growth of mini-multinationals
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
71.
In the last two decades, Latin American countries like Brazil, Mexico, and
Chile have _____.
A.
embraced communist principles
B.
promoted government ownership of enterprises
C.
experienced increasing debt and inflation
D.
welcomed foreign investment
In the past two decades, throughout most of Latin America, debt and
inflation are down, governments have sold state-owned enterprises to
private investors, foreign investment is welcomed, and the region’s
economies have expanded. Brazil, Mexico, and Chile have led the way.
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
72.
Which of the following is a risk associated with globalization?
A.
Restrictions on competition
B.
Global financial contagion
C.
Excessive market regulation
D.
Differentiation of markets
Greater globalization brings with it risks of its own. The opportunities for
doing business in a global economy may be significantly enhanced; however
the risks associated with global financial contagion are also greater.
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
73.
Supporters of globalization maintain that the apparent decline in real wage
rates of unskilled workers:
A.
is due to technological changes 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.
Supporters of globalization maintain that the weak growth rate in real wage
rates for unskilled workers owes far more to a technology-induced shift
within advanced economies away from jobs where the only qualification
was a willingness to turn up for work every day and toward jobs that require
significant education and skills.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
74.
A study published in 2011 by the OECD noted that:
A.
the real household income of the unskilled workers in the U.S. increased
more in comparison to that of the skilled workers.
B.
in almost all countries real income levels declined over the 20-year
period studied.
C.
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.
In a study published in 2011, the OECD found that between 1985 and 2008
real household income (adjusted for inflation) increased by 1.7 percent
annually among its member states. The real income level of the poorest 10
percent of the population increased at 1.4 percent on average, while that of
the richest 10 percent increased by 2 percent annually (i.e., while everyone
75.
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
A number of econometric studies have found consistent evidence of a
hump-shaped relationship between income levels and pollution levels. As
an economy grows and income levels rise, initially pollution levels also rise.
However, past some point, rising income levels lead to demands for greater
environmental protection, and pollution levels then fall.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
76.
NAFTA was passed only after:
A.
China agreed to establish a higher minimum wage.
B.
the U.S. 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.
NAFTA was passed only after side agreements had been negotiated that
committed Mexico to tougher enforcement of environmental protection
regulations. Thus, supporters of free trade argue that factories based in
Mexico are now cleaner than they would have been without the passage of
NAFTA.
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
77.
Globalization is criticized because it increases the power of _____.
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
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
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of globalization.
Topic: The Globalization Debate
78.
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 defence expenditure.
The World Trade Organization has estimated that if the developed nations
of the world eradicated subsidies to their agricultural producers and
removed tariff barriers to trade in agriculture this would raise global
economic welfare by $128 billion, with $30 billion of that going to
developing nations, many of which are highly indebted.
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