IB Chapter 1: Globalization

Select the four facts that described the demographics of the global economy up until the 1960s.

-The dominance of large, multinational U.S. firms in the international business scene -Roughly half of the globe was off-limits to Western international business -U.S. dominance in the world economy and world trade -U.S. dominance in world foreign direct investment

During the 1960s, U.S. firms created just over _____ of worldwide foreign direct investment and British firms were second accounting for just over 10 percent.

65 percent

While the United States was the dominant industrial power in the early 1960s, by 2018, _____ took over that role.

China

The World Trade Organization (WTO) is the successor to ______.

GATT

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called ______ Law.

Moore's

Trade agreements between nations are another way in which trade barriers have been reduced. Which statement accurately depicts the current state of trade agreements in the world?

Since the 1990s, trade agreements have increased dramatically.

Which statement best describes the International Monetary Fund (IMF)?

The IMF is often seen as the lender of last resort to nation states whose economies are in turmoil.

What is an accurate description of microprocessors?

They can decode vast amounts of information.

During the 1920s and 1930s, many of the world's nation-states put formidable trade barriers in place. What was the main reason behind these actions?

To protect domestic industries from foreign competition

The negotiations called the _____, finalized in December 1993, established the World Trade Organization to police the international trading system.

Uruguay Round

When global institutions were introduced in the 1940s, governments in struggling nations would turn to the _____ for low-interest loans needed for infrastructure projects such as building roads.

World bank

Critics of globalization point out that free trade

allows firms to abuse the weak labor and environmental laws in developing countries.

One concern voiced by critics of globalization is that

an interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations.

According to critics of globalization, increased free trade and investment over the past few decades have

broadened the gap between the rich and poor nations.

Moore's law predicts that

computer power will double every 18 months.

A refrigerator parts manufacturer in China receives an order and loads the goods into a large receptacle that is then loaded on a ship headed for the United States. When the ship docks, this receptacle is placed onto a truck and the goods are delivered to a warehouse in Iowa. This scenario shows how _____ made the delivery of goods in the global marketplace much easier.

containerization

What is a challenge faced by companies entering the global market?

differences in consumer tastes and preferences

One reason why a global market does not fully exist is _____.

differences in legal regulations among national markets

Critics of globalization protest in order to

diminish the impact of the culture of multinational enterprises on the world.

The opponents of globalization argue that falling barriers to international trade will

eliminate manufacturing jobs in wealthy economies.

International trade occurs when a firm _____.

exports goods or services to consumers in another country

The Johnson Automotive Group recently closed two of its U.S. manufacturing facilities and opened a new facility in Asia to take advantage of lower labor costs and savings in energy costs. The company made this change in order to benefit from _____.

factors of production

True or false: The first web browser was introduced to the public in the 1970s and started the explosive growth of the Internet in foreign transactions.

false: it was in 1994

The globalization of markets and production implies that

firms are limiting their production activities to their local regions.

A U.S.-based shoe company has decided to invest in a British company that specializes in clasps and buckles. This would be an example of _____.

foreign direct investment

The International Monetary Fund and the World Bank are both examples of _____ that help govern the global business system.

global institutions

It is common practice for people today to use products that are produced or assembled in various nations around the world. This is a reflection of _____.

globalization

Which term refers to the shift toward a more integrated and interdependent world economy?

globalization

Renata is traveling across Europe and is surprised to find Starbucks, McDonald's, and Coca-Cola in nearly every city she visits. This shows a convergence of consumer tastes, which creates a _____.

globalization of markets

When Jerry started his small appliance manufacturing company in the 1950s, every component part was made in the United States and the product was assembled in the United States. Today, he sources the components from China. The change at this company is an example of the _____.

globalization of production

The risks of doing business in countries that are facing revolutions are

higher than in countries not facing them

Brite-Way Lighting is based in California and sells products within the United States as well as to ten foreign countries. Brite-Way Lighting is an example of a(n) _____ business.

international

Just a few decades ago, it would have cost a business much more money to find buyers in a foreign country. What has helped lower the cost of this process and allows buyers and sellers to easily find each other regardless of their location?

internet

The ______ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone.

internet

Those who support globalization argue that increasing globalization will

lead to reduced prices for goods and services

The Uruguay Round negotiations resulted in

lowering the trade barriers between various national markets.

The globalization of _____ is the term used to describe the merging of national markets into one large global place.

markets

As international trade expands, the economies of the world's nation-states are becoming ______.

more intertwined

f you were to describe the global economy of the twenty-first century, it would be accurate to say that

more nations are becoming part of the developed world

A(n) ______ is any entity that conducts business in at least two countries

multinational enterprise

Land, labor, capital, and energy are all examples of factors of _____.

production

The development of the microprocessor has

reduced the cost of global communications

In terms of innovation in transportation technology occurring since the 1950s, the development of _____ has essentially reduced the size of our entire world.

super-freighters, commercial jets

Advances in information processing and communication are two ways _____ has made the globalization of markets a reality.

technology

The decline of the United States' standing in industrial power since the 1960s is considered a relative decline because it is a reflection of

the faster economic growth of other economies.

Which organization ensures that nation states comply to the rules associated with trade treaties signed by member states?

the world trade organization

Why would a company engage in the globalization of production?

to lower their overall cost structure

Supporters of globalization argue that bodies such as the World Trade Organization and the United Nations exist to serve the collective interests of member states, not to subvert those interests.

true

The International Monetary Fund (IMF) was established to ensure the stability of the international monetary system.

true