INTERNATIONAL BUSINESS CHAPTER 1

Countries that markedly increased their share of world output from 1960 to 2010 included Germany, France, and the United Kingdom.

False

The United States accounted for a significantly larger share of the world economy in 2011 than it did in the 1960's.

False

The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity.

True

The lowering of trade and investment barriers: A. protects domestic industries from foreign competition. B. was not an agenda of the Uruguay Round. C. allows firms to base production at optimal locations outside their home country. D. creates an unfavorable environment for FDI. E. caused the Great depression of the 1930s.

C. allows firms to base production at optimal locations outside their home country.

In the past quarter century, the volume of cross-border trade and investment has been growing less rapidly than global output.

False

One concern of globalization opponents is that it undermines the influence of supranational organizations and promotes the sovereignty of individual nation-states.

False

The IMF is less controversial than its sister institution, the World Bank

False

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

False

Although most international trade and investment is still conducted by large firms, many medium-size and small businesses are becoming increasingly involved in international trade and investment.

True

Among developing nations, the largest recipient of foreign direct investment has been China

True

By offering the same basic product worldwide, firms help to create a global market.

True

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 the attack of foreign competitors.

False

The rise of the Internet is increasing the barriers that small firms face in building international sales.

False

Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances

True

Despite all the talk about the emerging global village, differences between countries such as cultures and political systems are very profound and enduring.

True

Differences among countries require that an international business vary its practices country by country

True

Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

True

Globalization has resulted in greater uniformity replacing diversity across national markets.

True

In general, as countries get richer, they enact tougher environmental and labor regulations.

True

In return for loans, the IMF requires nation-states to adopt specific economic policies aimed at returning their troubled economies to stability and growth.

True

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.

True

Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic policies and free market economies.

True

One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and western Europe.

True

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.

True

The International Monetary Fund and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire.

True

The Internet has been a major force facilitating international trade in services.

True

The Uruguay Round, held under the umbrella of GATT, extended GATT to cover services as well as manufactured goods.

True

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.

True

The real costs of information processing and communication have fallen dramatically in the past two decades.

True

The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country.

True

Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically

True

While advances in telecommunications are creating a global audience, advances in transportation are creating a global village.

True

Which of the following is most likely to be the best suited product for a global market? A. Microprocessors B. Fast food like hamburgers C. Clothes and accessories D. Bank and other personal services E. Household furnishings

A) Microprocessors

A software company uses engineers in India to perform maintenance functions on software designed in the United States, and it also uses Indian accountants to compile tax returns. According to this information, the U.S. based company is most likely using: A. outsourcing. B. job sharing. C. job rotation. D. franchising. E. apprenticeship.

A) Outsourcing

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: A. globalization of production. B. localization of markets. C. increasing differences in tastes and preferences of consumers across the world. D. nationalization of private enterprises. E. rise of communism throughout the globe.

A) globalization of production

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: A. significant differences still exist among national markets. B. cultural diversity has been replaced by global uniformity. C. the global market is less complex than national markets. D. a company does not have to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets. E. the social norms in a country do not affect purchase decisions of consumers.

A) significant differences still exist among national markets

Which of the following best illustrates the globalization of production? A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India for the cutting process. B. Evan Swan, a U.S. based fashion designer, is planning to open a flagship store in China to serve the Asian market. C. Uncle Crab, a UK fast food chain, has been serving customers worldwide through its franchises. D. Silver Unicorn Inc. uses sales personnel from the respective host country to sell its products and services. E. Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the tastes of its American and Australian customers.

A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India for the cutting process.

Which of the following is a part of the agenda of the Doha Round of talks launched by the WTO? A. Limiting the use of antidumping laws B. Abolishing the International Monetary Fund C. Increasing tariffs on industrial goods, services, and agricultural products D. Persuading member governments to cut defense spending E. Establishing GATT as a replacement for the WTO

A. Limiting the use of antidumping laws

While the lowering of trade barriers made globalization of markets and production a theoretical possibility, which of the following has made it a tangible reality? A. Major advances in communication, information processing, and transportation technologies B. The rise of communism and the need for independent economies on a global scale C. The increasing diversity in consumer tastes and preferences worldwide D. The increasing differences in the material culture the world over E. The decreasing significance of the World Trade Organization

A. Major advances in communication, information processing, and transportation technologies

Which of the following countries has seen a relative decline in its share of world output between 1960 and 2010? A. The United States B. Thailand C. Japan D. China E. South Korea

A. The United States

Which of the following statements is true about the changing demographics of the global economy? A. U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports. B. The change in the position of the U.S. in terms of the share of world output is the result of the absolute decline in the health of the U.S. economy. C. From 1960 to 2010, countries that experienced a large decrease in their share of world output include Japan, Thailand, Malaysia, Taiwan, and South Korea. D. The United States is the only developed nation to see its relative standing in the share of world output slip. E. Today, roughly half the globe—the centrally planned economies of the communist world—is off-limits to Western international businesses.

A. U.S. dominance in export markets has waned as Japan, Germany, and a number of newly industrialized countries have taken a larger share of world exports.

Which of the following organizations was established at the 1993 Uruguay Round? A. World Trade Organization B. International Court of Justice C. International Trade Enforcement Agency D. United Nations E. World Bank

A. World Trade Organization

According to the UN Charter, one of the four purposes of the UN is to: A. be a center for harmonizing the actions of nations. B. encourage member-nations to increase trade barriers. C. provide interest-free loans to poor countries to implement infrastructure projects. D. promote the creation of regional free trade agreements. E. spread communism worldwide.

A. be a center for harmonizing the actions of nations.

The motivation for much of the foreign direct investment by non-U.S. firms was the desire to: A. disperse production activities to optimal locations. B. suppress the emerging economies such as China, India, and Brazil. C. spread communism throughout the world. D. increase the competition between domestic industries and U.S. corporations. E. bridge the national differences in culture, consumer preferences, and business practices.

A. disperse production activities to optimal locations.

The G20 comprises the _____ of the 19 largest economies in the world, plus representatives from the European Union and the European Central Bank. A. finance ministers and central bank governors B. presidents and defense ministers C. prime ministers and army chiefs D. international trade ministers E. ministers of foreign affairs

A. finance ministers and central bank governors

Since 1980, the world's containership fleet has more than quadrupled, reflecting in part the: A. growing volume of international trade. B. decreasing productivity of labor. C. rising costs of containerization. D. increasing transportation costs. E. decreasing employment opportunities across the globe.

A. growing volume of international trade.

If in the present time, an International company decides to do business with the former Communist nations of Europe and Asia it would most likely benefit from the: A. host of export and investment opportunities presented by these countries. B. low business risks involved in doing business with these countries. C. authoritarian governments of these nations. D. highly developed economies of these countries. E. highly stable political and economic conditions in these countries.

A. host of export and investment opportunities presented by these countries.

In 1944, the IMF was established to: A. maintain order in the international monetary system. B. preserve peace through international cooperation and collective security. C. promote respect for human rights. D. control the fossil-fuel emissions of the member states by imposing monetary fines. E. formulate a coordinated policy response to financial crises in developing nations.

A. maintain order in the international monetary system.

Growing income inequality between the skilled and unskilled workers in advanced nations, such as the United States, is a result of the: A. wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted. B. decrease in the outsourcing of low-wage manufacturing jobs offshore and a corresponding increase in demand for unskilled workers. C. shift within advanced economies toward jobs where the only qualification is the willingness to turn up for work every day. D. increasing wage gap between developing and developed nations. E. shortage of unskilled workers and an excess supply of highly skilled workers.

A. wages for skilled workers being bid up by the labor market and the wages for unskilled workers being discounted.

Which of the following statements best supports the claim that greater uniformity replaces diversity in the context of global markets? A. Differences in business systems and legal regulations, lead companies to customize their marketing strategies, product features, and operating practices to best match conditions in a particular country. B. As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating homogeneity across markets. C. Truly innovative companies succeed by developing products that serve specific needs of the local markets. D. The volume of goods, services, and investment crossing national borders has expanded at a slower rate than world output for more than half a century. E. The most global of markets are not typically markets for consumer products as significant differences in consumer tastes and preferences still exist among national markets.

B. As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating homogeneity across markets.

Which of the following best exemplifies foreign direct investment (FDI)? A. Pure Pearls, a jewelry store in the U.S., imports harvested pearls from Indonesia, Philippines, and Australia. B. Chivalry, a U.S. based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market. C. Delicate Love, a reputed florist company in Holland, exports tulips and roses throughout the globe. D. Samantha started an Italian restaurant in her home country, the United States, after she took cooking lessons from a reputed chef in Italy. E. Yin and Yang Inc., a Chinese firm, supplies buttons and zips to major denim brands in the UK.

B. Chivalry, a U.S. based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market.

Which of the following is a benefit of lowering the barriers to international trade? A. Domestic industries are better protected from foreign competition. B. Firms can view the world, rather than a single country, as their market. C. The lowering of barriers promotes communism across the globe. D. The lowering of barriers puts a brake on globalization of both markets and production. E. The economies of the members of the WTO become self-contained entities.

B. Firms can view the world, rather than a single country, as their market.

The _____ was originally established in 1999 to formulate a coordinated policy response to financial crises in developing nations. A. United Nations B. G-20 C. World Trade Organization D. International Court of Justice E. World Bank

B. G-20

Which of the following would be the biggest gain for the world's poor nations from the 2001 Doha WTO talks? A. Gain from increasing barriers to cross-border investment B. Gain from reduced agricultural tariffs and subsidies C. Gain from expanding the use of antidumping laws D. Gain from the promotion of communism across the globe E. Gain from increased protectionism in the markets of the developed world

B. Gain from reduced agricultural tariffs and subsidies

In the context of the changing demographics of the global economy, which of the following has seen a decline? A. Economic development and industrialization of the developing nations B. The U.S. share of world exports of goods and services C. Deregulation of the markets in the centrally planned economies of the communist world D. Japan, Thailand, Malaysia, Taiwan, and South Korea's share of world output E. Economic opportunities in the developing nations of the world

B. The U.S. share of world exports of goods and services

Which of the following conditions is most likely to act as a deterrent for foreign firms willing to do business with former Communist nations of East Europe and central Asia? A. The high levels of economic development in these countries B. The signs of growing unrest and totalitarian tendencies seen in these countries C. A strong commitment to market-based economic systems seen in these countries D. The collapse of communism in these countries E. Low returns involved in doing business in these countries

B. The signs of growing unrest and totalitarian tendencies seen in these countries

Which of the following statements is true about the implications of technological innovations for the globalization of markets? A. Technological innovations have facilitated the globalization of production, but have failed to facilitate the globalization of markets. B. Though technological innovations are ushering in the "global village," significant national differences remain in consumer preferences, and business practices. C. Technological innovations have caused the rise of communism across the globe. D. Technological innovations have failed to create global markets for consumer products. E. Technological innovations have increased the cost of communication which is hampering globalization of markets.

B. Though technological innovations are ushering in the "global village," significant national differences remain in consumer preferences, and business practices.

In the present times, many of the former Communist nations of Europe and Asia: A. are closed for Western international businesses. B. are committed to democratic politics. C. are against free market economics. D. have prohibited the use of the Internet by small multinationals. E. have highly developed economies.

B. are committed to democratic politics.

Gem Globe, an American company, has invested substantial capital in precious stones mining activities outside the United States. This practice is referred to as: A. unrelated diversification. B. foreign direct investment. C. cross-border bartering. D. organizational divestment. E. international cartel.

B. foreign direct investment.

The sustained flow of foreign investment into developing nations: A. has resulted in the rise of communism in those countries. B. has been increasing since the 1980s. C. is aimed at Western powers building political influence in those regions. D. is detrimental to the economic growth in those countries. E. has resulted in a declining trend for firms from these countries to invest outside their borders.

B. has been increasing since the 1980s.

Exporting jobs" to low-wage nations has contributed to: A. higher living standards in those countries that "export" the jobs. B. higher unemployment in wealthy advanced economies such as the United States. C. increase in the income levels in those nations that "export" the jobs. D. lower standards of living in those countries in which the jobs are exported. E. reduced specialization in the production of goods and services.

B. higher unemployment in wealthy advanced economies such as the United States.

For foreign direct investment (FDI) to occur, a firm should primarily: A. conduct cross-border bartering with neighboring countries. B. invest resources in business activities outside its home country. C. export goods or services to consumers in another country. D. import goods or services from producers in another country. E. erect formidable barriers to international trade.

B. invest resources in business activities outside its home country.

Development of the microprocessor is most likely to be considered the single most important innovation in technology because: A. it has made the economies of the world's nation-states less intertwined. B. it has enabled the explosive growth of low-cost computing. C. it has increased the national differences in the cost and quality of factors of production. D. it has helped in increasing barriers to international trade and investment. E. it has isolated nations from each other by distance, time zones, and language.

B. it has enabled the explosive growth of low-cost computing.

Early outsourcing efforts were primarily confined to _____. A. accounting activities B. manufacturing activities C. healthcare services D. educational activities E. consulting services

B. manufacturing activities

The World Bank was primarily created in 1944 to: A. preserve peace through international cooperation and collective security. B. promote economic development. C. render judgments on disputes submitted to it by member states. D. furnish advisory opinions on questions referred to it by authorized bodies. E. promote respect for human rights.

B. promote economic development.

The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World War II, was to: A. deter any possible attempts to promote communism. B. protect domestic industries from foreign competition. C. prevent the occurrence of the Great Depression. D. safeguard patents, copyrights, and trademarks. E. promote the trade of services over the trade of manufactured goods.

B. protect domestic industries from foreign competition.

_____ refers to the shift toward a more integrated and interdependent world economy. A. Forward integration B. Mass customization C. Globalization D. Commercialization E. Vertical integration

C) Globalization

Globalization results in a greater degree of _____ across markets than would be present otherwise. A. regulatory control B. diversity C. homogeneity D. administrative barrier E. communism

C) Homogeneity

Which of the following statements is true regarding the globalization of markets? A. As a result of the globalization of markets, tastes and preferences of consumers in different nations are beginning to differ more. B. By offering the same basic product worldwide, firms fail to create a global market. C. There still exist significant differences among national markets along many relevant dimensions, including distribution channels, culturally embedded value systems, and legal regulations. D. The most global of markets are not typically markets for industrial goods and materials, but markets for consumer products. E. A company has to be the size of a multinational giant, such as Citigroup or Coca-Cola, to facilitate, and benefit from, the globalization of markets.

C) There still exist significant differences among national markets along many relevant dimensions, including distribution channels, culturally embedded value systems and legal regulations.

The advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations. This goal was enshrined in the: A. Inter-American Treaty of Reciprocal Assistance. B. Comprehensive Economic Partnership Agreement. C. General Agreement on Tariffs and Trade. D. North American Free Trade Agreement. E. United Nations charter.

C. General Agreement on Tariffs and Trade.

Which of the following is the most appropriate solution to the problem of rising carbon dioxide emissions in developed economies? A. Roll back the trade liberalization efforts that have fostered economic growth and globalization. B. Tie free trade agreements to the implementation of fewer environmental and labor laws in less developed countries. C. Get the nations of the world to agree to policies designed to limit pollutant emissions. D. Increase the export of low-wage manufacturing jobs to developing nations E. Restrict international trade and investment only to services.

C. Get the nations of the world to agree to policies designed to limit pollutant emissions.

Which of the following statements is true about the Internet and World Wide Web? A. It has increased the real costs of information processing and communication. B. It increases the costs of coordinating and controlling a global organization. C. It makes it easier for buyers and sellers to find each other, wherever they may be located. D. It is only accessible to large businesses considered as multinational giants. E. It increases some of the business constraints of location, scale, and time zones.

C. It makes it easier for buyers and sellers to find each other, wherever they may be located.

_____ predicts that the power of microprocessor technology doubles and the cost of production falls every 18 months. A. Bell's law B. Murphy's law C. Moore's law D. Ohm's law E. Engel's law

C. Moore's law

Which of the following has been detrimental to the globalization of markets and production? A. The advent of containerization B. The use of the Internet and services such as Skype C. National differences in culture, consumer preferences, and business practices D. Privatizing state-owned enterprises E. The collapse of communism

C. National differences in culture, consumer preferences, and business practices

Which of the following statements is most likely to be true of outsourcing? A. Dispersing value-creation activities through outsourcing tends to increase the costs requires to develop a product offering. B. In today's world, outsourcing efforts are primarily confined to manufacturing activities, and do not include service activities. C. Outsourcing production to foreign countries increases the chance for companies to gain significant orders for their products from those countries. D. Outsourcing always increases the time required to develop a product, and allows no manufacturing flexibility. E. A multinational company cannot customize its products for local markets of different countries if it outsources its production activities.

C. Outsourcing production to foreign countries increases the chance for companies to gain significant orders for their products from those countries.

Michelle, an Italian fashion designer, sells her merchandise by exporting them to the U.S., UK, and Brazil. According to this information, Michelle is most likely involved in: A. foreign direct investment. B. foreign institutional investment. C. international trade. D. cross-border bartering. E. outsourcing.

C. international trade.

The globalization of production mainly occurs due to the: A. growing cultural homogeneity across markets. B. increasing differences in the tastes and preferences of consumers in different nations. C. national differences in the cost and quality of factors such as labor, energy, land, and capital. D. rise in communism the world over. E. increasing worldwide demand for unskilled workers.

C. national differences in the cost and quality of factors such as labor, energy, land, and capital.

In 2008-09, the G20 primarily worked to: A. address the concerns for human rights in sweatshops. B. formulate policies to counter hunger and poverty in underdeveloped nations of the world. C. provide a forum to launch a coordinated policy response to the global financial crisis. D. help create a unified action plan to counter the threat of global terrorism. E. render judgments on patent disputes submitted to it by member-states.

C. provide a forum to launch a coordinated policy response to the global financial crisis.

The advent of containerization has: A. made the economies of the world's nation-states less intertwined. B. made moving goods from one mode of transport to another extremely labor-intensive. C. significantly lowered the costs of shipping goods over long distances. D. slowed down the globalization of markets and production. E. increased costs of coordinating and controlling a global organization.

C. significantly lowered the costs of shipping goods over long distances.

The _____ refers to the total cumulative value of foreign investments. A. weighted average foreign exchange B. leveraged foreign investment C. stock of foreign direct investment D. adjusted foreign exchange E. horizontal foreign direct investment

C. stock of foreign direct investment

What has reduced as a result of globalization? A. Volume of goods and services crossing national borders B. Foreign exchange transaction C. Procuring product inputs from all over the world D. Differences in material culture between national economies E. Deregulation of markets

D) Differences in material culture between national economies

The _____ 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. A. globalization of markets B. augmentation of products C. amplification of production D. globalization of production E. capitalization of markets

D) globalization of production

_____ is an international treaty that committed signatories to lowering barriers to the free flow of goods across national borders and is the predecessor to the World Trade Organization. A. North American Free Trade Agreement B. Commonwealth of Independent States Free Trade Agreement C. Kyoto protocol D. General Agreement on Tariffs and Trade E. Agreement on Trade-Related Aspects of Intellectual Property Rights

D. General Agreement on Tariffs and Trade

_____ was the world's most dominant industrial power in the early 1960s. A. India B. Brazil C. Spain D. The United States E. China

D. The United States

Which of the following statements is true about the implications of globalization on developing countries? A. Globalization has depressed wages in developing nations. B. Among the developed countries, the earnings gap between workers in skilled and unskilled sectors has widened. C. Globalization is increasing the wage gap between developing and developed nations as developed nations experience rapid economic growth. D. The citizens of developing countries have achieved higher living standards due to globalization. E. Globalization has destroyed manufacturing jobs in developing economies.

D. The citizens of developing countries have achieved higher living standards due to globalization.

Which of the following has seen a positive change from 1960 to 2010? A. Growth of the centrally planned economies of the communist world B. U.S. position in the world economy and world trade picture C. The share of world output enjoyed by rich industrialized countries such as Great Britain, Germany, and Japan D. The share of world output accounted for by developing nations E. Prevalence of independent and self-contained national economies

D. The share of world output accounted for by developing nations

The _____ was established in 1945 by 51 countries committed to preserving peace through international cooperation and collective security. A. Greenpeace organization B. Amnesty International C. League of Nations D. United Nations E. G-20

D. United Nations

Due to the changing economic geography, many of tomorrow's economic opportunities are most likely to be found in the: A. rich industrialized nations of the world like Great Britain and Germany. B. centrally planned economies of the communist world. C. United States. D. developing nations of the world such as China, India, and Brazil. E. countries that are currently not members of the World Trade Organization.

D. developing nations of the world such as China, India, and Brazil.

When a firm invests resources in business activities outside its home country, it is referred to as: A. foreign exchange. B. foreign divestiture. C. speculative investment. D. foreign direct investment. E. cross-border cartel.

D. foreign direct investment.

A notable trend in the demographics of the multinational enterprise since the 1960s is the: A. replacement of medium-size and small multinational companies by the multinational giants. B. decline of the non-U.S. multinationals. C. decline of multinationals entering the developing nations of the world. D. growth of mini-multinationals. E. monopolization of the markets in developing countries by U.S. multinational corporations.

D. growth of mini-multinationals.

The 1993 Uruguay Round: A. increased the trade and investment barriers. B. excluded the trade of services from international trade. C. transformed the World Trade Organization into the GATT. D. provided enhanced protection for patents, trademarks, and copyrights. E. promoted the worldwide rise of communism.

D. provided enhanced protection for patents, trademarks, and copyrights.

Gerald gifted his son, David, a computer two years ago. Recently, he decided to gift his daughter, Julian, a computer of her own. In the context of the two year gap between the purchase of both the computers and Moore's law, it is most likely that: A. Gerald paid a higher price for Julian's computer. B. David's computer will have a microprocessor with better power than that of Julian's. C. both David's and Julian's computers would cost Gerald the same price. D. the microprocessor in Julian's computer will be more advanced in terms of power than that of David's. E. the power of the microprocessors, in both David and Julian's computers, would be the same.

D. the microprocessor in Julian's computer will be more advanced in terms of power than that of David's.

Which of the following statements is true about the general implications of globalization? A. Globalization is inevitable. B. From a purely economic perspective, globalization is all good. C. Globalization has no negative impacts on the economies of the developed world. D. Globalization has reduced the risks associated with global financial contagion. E. As a result of globalization, a severe crisis in one region of the world can affect the entire globe.

E. As a result of globalization, a severe crisis in one region of the world can affect the entire globe.

Which of the following has been declining in the developing nations of the world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil ? A. Economic opportunities for international trade B. Industrialization C. Contribution toward the share of world output D. The stock of foreign direct investment E. Barriers to the free flow of goods, services, and capital

E. Barriers to the free flow of goods, services, and capital

Which of the following reasons contributed to the Great Depression of the 1930s? A. Inability to meet the increasing world demand for products B. Several countries accepting General Agreement on Tariffs and Trade C. Increasing attack from foreign competitors on domestic industries D. Privatization of state-owned organizations E. Countries progressively raising trade barriers against each other

E. Countries progressively raising trade barriers against each other

Which of the following is a macro factor underlying the trend toward greater globalization? A. Rise of communism across the globe B. Increasing nationalization of private organization C. Increasing diversity in the tastes and preferences of consumers in different nations D. Increasing trade regulations across the globe E. Dramatic developments in recent years in information processing and other technologies

E. Dramatic developments in recent years in information processing and other technologies

Which of the following is an argument put forth by critics of the IMF? A. It increases barriers to the free flow of goods and investment across national borders. B. It only provides assistance to developing nations and completely ignores the developed nations. C. It is not powerful enough to ensure that the nation-states adhere to the rules laid down in trade treaties. D. It promotes the rise of communism across the globe. E. It usurps the sovereignty of nation-states by telling governments what economic policies they must adopt.

E. It usurps the sovereignty of nation-states by telling governments what economic policies they must adopt.

Which of the following is most likely to be observed in today's global economy? A. Increasing U.S. share of world output B. Large U.S. entrepreneurial firms dominating the international business scene C. Increasing U.S. dominance in the world economy and world trade picture D. Most of the nations being governed by centrally planned economies of the communist world E. Rapid rise in the share of world output accounted for by developing nations such as China and India

E. Rapid rise in the share of world output accounted for by developing nations such as China and India

Which of the following statements is true about the changing foreign direct investment picture of the global economy? A. Throughout the 1990s, the amount of investment directed at both developed and developing nations decreased dramatically. B. There has been a fall in the share of FDI stock accounted for by developing nations reflecting a declining trend for firms from these countries to invest outside their borders. C. Among developing nations, the lowest recipient of foreign direct investment has been China. D. The share of FDI stock accounted for by U.S. firms has been drastically increasing from 1980s. E. The sustained flow of foreign investment into developing nations is an important stimulus for economic growth in those countries.

E. The sustained flow of foreign investment into developing nations is an important stimulus for economic growth in those countries.

Which of the following reasons has made outsourcing of service activities to low-cost producers in other nations possible? A. Increasing diversity in material culture among national markets B. Government regulations limiting certain service activities in the home country C. Increasing foreign competition in manufacturing industries D. Rise in communism globally E. Use of modern communications technology

E. Use of modern communications technology

The _____ is the less controversial sister institution of the IMF which was created along with the IMF in 1944. A. G-20 B. International Court of Justice C. League of Nations D. World Trade Organization E. World Bank

E. World Bank

The _____ has been a major force facilitating international trade in services. A. advent of containerization B. development of commercial jet aircraft C. retaliatory trade policies toward international trade in goods D. decline in the U.S. share of world output E. advent of the Internet

E. advent of the Internet

A company has to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets.

False

A firm has to become a multinational enterprise, investing directly in operations in other countries, to engage in international business.

False

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.

False

As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries.

False

As a result of globalization, we have been moving toward a world in which national economies are relatively self-contained entities.

False

As a result of international trade, the economies of the world's nation-states are becoming less intertwined.

False

As firms follow each other around the world, they bring with them many of the assets that served them well in other national markets. Thus, greater diversity replaces uniformity.

False

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.

False

Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by pursuing retaliatory trade policies rather than free trade policies.

False