Chapter 1: Globalization

b. Multinational enterprise

A(n) _______________________ is any business that has productive activities in two or more countries. a. Intrastate corporation. b. Multinational enterprise c. Transnational union d. Conglomerate

a. International

A(n) ________________________ business is any firm that engages in cross-border trade of investment. a. International b. Multi-National c. Supranational d. Intranational

a. $8,000.

At some point, rising income levels lead to demands for greater environmental protection and, as a result, pollution levels fall. A study of Grossman and Krueger found that generally occurred before per capita income levels reached a. $8,000. b. $1,000. c. $25,000. d. $31,000.

b. Free trade

Colin told the management team that their Ohio-based company should produce the textiles for the new line of jackets in China because it would allow them to price the clothing line lower, which would then give consumers more money to spend on other items. Colin is making an argument for ___________. a. Tragedy of the commons. b. Free trade c. Domestic trade. d. Mass customization.

d. The globalization of production

Company ABC, based in Tennessee, sources goods from Southeast Asia to take advantage of labor cost savings. This is an example of _____________________________. a. Intrastate investment b. The tragedy of the commons c. Licensing d. The globalization of production

a. Diminish the impact of the culture of multinational enterprises on the world.

Critics of globalization protest in order to a. Diminish the impact of the culture of multinational enterprises on the world. b. Encourage a shift toward a more integrated and interdependent global economy. c. Lower the barriers to cross-border investments. Increase the number of enterprises that offshore their business activities.

B. Closer to Reason: Current trends indicate the world is moving toward an economic system that is more favorable for international business.

Current trends indicate that, due to the emerging economies, the world is moving _______________ an economic system that is more favorable for international business. A. Further away from B. Closer to C. Similar to

c. An increase in trade barriers resulted.

During the 1920s and 1930s, when high tariffs were placed on imported manufactured goods, a. Domestic firms were left unprotected from foreign competition. b. Countries encouraged foreign direct investment. c. An increase in trade barriers resulted. d. A decrease in trade barriers resulted.

c. The globalization of markets

Historically, national markets were distinct and separate entities. Today, these separate national markets have merged. This process is known as ____________________________. a. The tragedy of the commons b. Cottage industries c. The globalization of markets d. Mass customization

a. It makes it easier for buyers and sellers to connect.

In terms of international business, what is a benefit of the Internet? a. It makes it easier for buyers and sellers to connect. b. It can only be used by larger businesses. c. It makes it easier to protect copyright materials. d. It is independent of the Moore's law.

b. Globalization

In the 1960s, when a customer in the United States purchased a television, that television had been manufactured in the United States. Today, thanks to the fall of international trade barriers, televisions purchased in the United States might be manufactured in China or South Korea. This change has occurred as the result of _________________________________. a. Domestication b. Globalization c. Inpatriation d. Customization

d. It has diminished in power.

In the early 1960s, the U.S. was the world's dominant industrial power. How does the U.S. position compare today? a. It is about the same. b. It is the only nation to see a decrease in power. c. It has grown significantly. d. It has diminished in power.

a. High tariffs on imports of foreign goods.

In the years leading up to the Great Depression, what practice created a barrier to international trade? a. High tariffs on imports of foreign goods. b. High political stability across countries c. High demand of products d. High quality of service activities.

c. Falling barriers to international trade drive the economy toward greater property.

Influential economists, politicians, and business leaders who favor globalization argue that a. Lowering trade barriers decrease the incomes of consumers. b. Increasing cross-border investment will increase the prices for goods and services. c. Falling barriers to international trade drive the economy toward greater property.

b. Exports goods or services to consumers in another country.

International trade occurs when a company a. Purchases a foreign company. b. Exports goods or services to consumers in another country. c. Invests in business activities outside its home country. d. Removes a foreign supplier from its supply chain.

c. Foreign direct investment.

Mallory's US-based lifestyle company decides to invest in an Italian company that specializes in health and wellness. This would be an example of a. International trade. b. Market diversity. c. Foreign direct investment. d. Tragedy of the commons.

c. International

Michael works at a lawnmower manufacturing company in St. Louis, Missouri, and his company imports component parts from Thailand and also ships final product to various countries. Michael's company is an example of a(n) _______________________ business. a. Domestic b. Multi-National c. International

d. Microprocessor technology power will double approximately every 18 months.

Moore's Law predicts that a. The power of microprocessor technology doubles along with its cost of production. b. Software is getting slower more rapidly than hardware becomes faster. c. The cost of microprocessor technology doubles every time the power increases. d. Microprocessor technology power will double approximately every 18 months.

d. Trade

One of the global institutions that emerged over the past 75 years is GATT which stands for the General Agreement on Tariffs and _____________. a. Targets b. Time c. Taxes d. Trade

b. Costs.

Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the a. Usage. b. Costs. c. Production. d. Sales.

d. Internet

The ______________________ has developed into the information backbone of the global economy and reduced the constraints of location, scale, and time zone. a. Government b. GATT c. IMF d. Internet

c. A reduction in the cost of global communications.

The development of the microprocessor has led to __________________________ a. A decrease in technology. b. Limitations on the type of data that can be transferred. c. A reduction in the cost of global communications. d. Increased computer communication costs.

a. Moore's

The doubling of the power of microprocessor technology while the costs of its production decreases by half is called _________________ Law. a. Moore's b. Skinner's c. Maslow's d. Keyne's

a. Production

The globalization of ___________________ refers to the fact that producers can source goods and services from anywhere in the world to take advantage of cost savings. a. Production b. Service c. Marketing d. Diversity

c. Domestic firms are facing intense competition from foreign firms.

The globalization of markets and production implies that a. There is a decrease in interdependency between nations. b. Firms are limiting their production activities to their local regions. c. Domestic firms are facing intense competition from foreign firms.

c. Improvement in transportation technology.

The globalization of markets is facilitated by the: a. Restriction on the use of communication technology. b. Increased barriers to cross-border trade. c. Improvement in transportation technology. d. Number of nations with closed economies.

a. Improve the quality or functionality of their product offering.

The national differences in the quality of factors of production helps companies a. Improve the quality or functionality of their product offering. b. Increase the overall cost structure of their business operations. c. Lower their profit margin thus allowing them to compete more effectively. d. Increase the barriers to cross-border trade.

c. Eliminate manufacturing jobs in wealthy economies.

The opponents of globalization argue that falling barriers to international trade a. Prevent countries from being interdependent on one another. b. Increase service jobs around the world. c. Eliminate manufacturing jobs in wealthy economies. d. Reduce job opportunities in developing nations where wages are much lower.

b. Total cumulative value

The outward stock of foreign direct investment refers to the ________________________________ of foreign investments by firms domiciled in a nation outside of the nation's borders. a. Diminished value b. Total cumulative value c. Cross-border flow d. Percentage of increase.

c. Technological change.

The text notes that there are two macro factors fueling the trend toward greater globalization. These two factors focus on a decline in trade barriers and a. Greater homogenization of tastes. b. Limited financing. c. Technological change. d. Customization of products.

d. Adopt economic policies based on free market economies.

Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to _________________________________. a. Maximize barriers to free trade. b. Increase tariffs on goods coming into the country. c. Increase the total population base. d. Adopt economic policies based on free market economies.

TRUE

True or False: Supports 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.

FALSE Reason: Both the IMF and the World Bank were established at Bretton Woods. The World Bank is the less controversial of the two institutions.

True or False: The International Monetary Fund (IMF) is considered less controversial than the World Bank.

FALSE Reason: As of 2019, there were 164 nations that were members of WTO and they accounted for 98% of world trade.

True or False: While there are a large number of nations that are members of the WTO, these nations account for only a small portion of world trade.

a. United Nations

What global institution was established on October 24, 1945 and one of its key purposes is to maintain international peace and security? a. United Nations b. World Bank c. International Monetary Fund d. G20

c. While favorable, economic trends have recently occurred, there is no guarantee that they will continue.

What is an accurate depiction of Latin America when considering International Business? a. Dictators who rule Latin American countries welcome Western international business as a way to build the economy. b. Latin America is a viable investment because it has historically well-managed economies. c. While favorable, economic trends have recently occurred, there is no guarantee that they will continue.

b. It reduces the costs of shipping goods over long distances.

What is an accurate depiction of containerization? a. It use has significantly reduced over the last few years. b. It reduces the costs of shipping goods over long distances. c. It does not facilitate the globalization of markets. d. It is very labor intensive and time consuming.

b. They can decode vast amounts of information.

What is an accurate description of microprocessors? a. The cost to produce them continues to increase even though their power diminishes. b. They can decode vast amounts of information. c. They are a highly expensive technology. d. They have become an outdated form of technology.

b. 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 the International Monetary Fund (IMF)? a. Unlike the World Trade Organization, the IMF does not usurp the sovereignty of nation-states. b. The IMF is often seen as the lender of last resort to nation-states whose economies are in turmoil. c. The IMF is less controversial than the World Bank. d. In return for loans, the IMF does not mandate nation-states to adopt specific economic policies.

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

What is one concern voiced by critics of globalization? a. Globalization increases the wages rates of unskilled workers in advanced countries. b. With globalization, companies are likely to move their operations to countries with more stringent labor and environmental regulations. c. An interdependent global economy shifts economic power away from national governments and toward organizations such as the United Nations. d. Falling barriers to cross-border trade and investment reduce job opportunities in developing nations where wages are much lower.

d. Bringing traditionally separate national markets into one cohesive marketplace.

What is the best description of the globalization of markets? a. Division of an existing market into smaller, independent market segments. b. Introduction of increased trade barriers to limit cross-border trade c. An economically independent market that operates without competition d. Bringing traditionally separate national markets into one cohesive marketplace.

a. Falling barriers to international trade results in job losses in those industries targeted by foreign competitors.

What issue might be raised at an antiglobalization demonstration? a. Falling barriers to international trade results in job losses in those industries targeted by foreign competitors. b. Falling barriers to international trade reduces uniformity among national markets. c. Falling barriers to international trade increases the choice of goods and services to consumers. d. Falling barriers to international trade reduces interdependency between countries.

a. Foreign direct investment.

When company invests in a company or entity outside its home country, it is participating in a. Foreign direct investment. b. Logistics. c. Intrastate financing. d. Entrepreneurship

a. Lowering international trade barriers raises the incomes of consumers.

Which argument favors globalization? a. Lowering international trade barriers raises the incomes of consumers. b. Increasing cross-border investment will increase the prices for goods and services. c. Falling barriers to international trade reduce interdependency between countries.

a. Carbon dioxide emissions.

Which environmental concern has been found to rise steadily with higher-income levels? a. Carbon dioxide emissions. b. Water quality. c. Lead concentrations. d. Sulfur dioxide pollution

a. The World Trade Organization

Which global institution is the successor to GATT? a. The World Trade Organization b. The United Nations c. The World Bank d. The international Monetary Fund

b. World Trade Organization

Which organization is responsible for policing the rules of trade between nations and making sure countries adhere to the rules of trade treaties signed by member states? a. World Bank b. World Trade Organization c. International Monetary Fund d. United Nations

c. More nations are becoming part of the developed world.

Which statement accurately describe the global economy in the twenty-first century? a. More nations are refusing to adopt liberal economic policies. b. Globalization can limit a country's movement toward greater economic development. c. More nations are becoming part of the developed world. d. Barriers to the free flow of goods have been increasing.

d. A vibrant global economy.

While it is known for its peacekeeping role, the United Nations devotes nearly 70% of its work toward promoting conditions of a. Political freedoms across the nations. b. Religious mandates. c. Gender equality. d. A vibrant global economy.

d. To lower their overall cost structure or improve the quality of their product offering

Why do companies engage in the globalization of production? a. To increase the barriers to cross-border trade b. To lower their profit margin by outsourcing, which allows them to compete more effectively. c. To increase the overall cost structure of their business operations d. To lower their overall cost structure or improve the quality of their product offering

b. Globalization

______________________ refers to the shift toward economic international integration. a. Repatriation b. Globalization c. Centralization d. Customization