MGMT 425 chapter 1 quiz
True or false: Globalization results in a decrease in non-U.S firms investment across national borders
False Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-U.S. firms increasingly began to invest across national borders.
True or False: Since the 1960s, a notable trend in the demographics of the multinational enterprise has been the rise of the U.S. multinationals
False explanation: 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.
True or false: Cultural differences have no effect on the way an international firm conducts its business around the globe.
False explanation: Differences among countries require that an international business vary its practices country by country.
the _____ is often seen as the lender of last resort a)world bank b)international monetary fund c)international development association d)world trade organization
B)international monetary fund explanation: The IMF is often 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.
True or False: Today nearly every nation in the world belongs to the United Nations
true explanation: The United Nations was established October 24, 1945, by 51 countries and today, nearly every nation in the world belongs to the United Nations. Membership now totals 193 countries.
True or False: One concern frequently voiced by those opposed to globalization is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and Western Europe
True explanation: 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. The critics argue that falling trade barriers allow firms to move manufacturing activities to countries were wage rates are much lower.
An international business is defined as: a) one that implements homogenous practice across countries b) the basis for a multinational enterprise c) a business that is restricted by U.N. regulations d) any firm that engages in international trade
d) any firm that engages in international trade explanation: A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses. All a firm has to do is export or import products from other countries. Differences among countries require that an international business vary its practices country by country. An international business must find ways to work within the limits imposed by government intervention in the international trade and investment system.
Opponents of globalization argue that falling trade barriers: a) allow firms to move manufacturing activities to countries with lower wage rates b) create manufacturing jobs wealthy advanced economies c) force countries to maintain manufacturing in their home countries regardless of wage rates d) reduce the pool of global labor
A) allow firms to move manufacturing activities to countries with lower wage rates explanation: 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. Critics argue that falling trade barriers allow firms to move manufacturing activities to countries where wage rates are much lower
Globalization critics argue that the decline in unskilled wage rates is due to the: A) migration of low-wage manufacturing jobs offshore B) privatization of government owned enterprises C) regulation of the global market by WTO D) technology-induced shift toward skilled jobs
A) migration of low-wage manufacturing jobs offshore explanation: The decline in unskilled wage rates may be due to the migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled workers.
The ____ was created in 1944 by 44 nations that met in Bretton Woods, New Hampshire to promote economic development: a) world bank b) international trade center c) world trade organization d) united nations
A) world bank explanation: The International Monetary Fund and the World Bank were both created in 1944 by the 44 nations that met at Bretton Woods, New Hampshire. The IMF was established to maintain order in the international monetary system; the World Bank was set up to promote economic development.
The purpose of the U.N's Millennium Development Goals that were established in 2000 was to a) reduce the number of people living in extreme poverty b)increase the supply of consumer goods to developing countries c) legitimize the globalization process d)increase the employment rate across all nations
A)reduce the number of people living in extreme poverty explanation: One of the United Nation's Millennium Development Goals was to cut in half the number of people living in extreme poverty by 2015. Subsequently, in September 2015, the United Nations ratified the Sustainable Development Goals that set targets to end poverty, protect the planet, and ensure prosperity for all countries by 2030.
The stock of foreign direct investment refers to: A) the entry of funds into a country when foreigners make purchases in the country's stock and bond markets B) the total cumulative value of foreign investments as a percentage of the country's GDP C) movements of labor, capital and other factors of production between countries D)total export or import products from other countries
B) the total cumulative value of foreign investments as a percentage of the country's GDP explanation: This term is the total cumulative value of foreign investments as a percentage of the country's GDP.
Which of the following actions was implemented in the Uruguay Round, finalized in December 1993? A)reduction in the protection for patents, trademarks, and copyrights B)establishment of the World Trade Organization C)extension of the GATT to cover consumer products D)enhancement of trade barriers
B)establishment of the World Trade Organization explanation:The Uruguay Round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization to police the international trading system.
Globalization has enabled organizations to reduce their cost of production by A) differentiating material culture that world over B) setting up barriers to cross-border trade C)creating manufacturing units in developing countries D)Turning national economies into self- contained entities
C) creating manufacturing units in developing countries explanation: The globalization of production 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 of production (such as labor, energy, land, and capital). By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.
Which of the following factors contributed to the Great Depression of the 1930s? a)artificial fixing of currency rate by China b) problems in the U.S. subprime mortgage lending market c)countries progressively raising trade barriers against each other d)outsourcing of manufacturing units to developed nations
C)countries progressively raising trade barriers against each other explanation: The "beggar thy neighbor" retaliatory trade policies involved countries progressively raising trade barriers against each other. Ultimately, this depressed world demand and contributed to the Great Depression of the 1930s.
Foreign direct investment occurs when a firm invests resources in: A) competitor-based products B) local agricultural production C) production and service technologies that will enhance globalization D)business activities outside its home country
D) business activities outside its home country explanation: The advanced industrial nations of the West committed themselves after World War II to progressively reduce barriers to the free flow of goods, services, and capital among nations. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.
Which of the following statements pertaining to changes in the global economy of the 21st century is true? A)Barriers to the free flow of goods, services, and capital have increased B) volume of global output has been growing more rapidly than cross-border trade and investment C) National economies are becoming more independent D)the world is moving toward an economic system that is more favorable for international business
D) the world is moving toward an economic system that is more favorable for international business explanation: Current trends indicate the world is moving toward an economic system that is more favorable for international business.
True or False: Supporters of globalization believe that tougher environmental regulations and stricter labor standards are a natural aspect of economic progress.
True explanation: Supporters of free trade and greater globalization argue that tougher environmental regulations and stricter labor standards go hand in hand with economic progress. In general, as countries get richer, they enact tougher standards .
True or False: a small country is short on cash for much needed infrastructure development projects. It could go to the World Bank for assistance.
True explanation: the World bank has focused on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments (such as building dams or roads)
Which of the following expresses one of the reasons why managing an international business is different from managing a purely domestic business? a) the range of problems confronted by a manager in a domestic business is wider and the problems more complex than those confronted by a manage in an international business b) international business transactions use the euro instead of the U.S. dollar c) an international business does not need to contend with government interventions whereas a domestic business must work within the confines of its local government d) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system
d) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system explanation: Managing an international business is different from managing a purely domestic business for at least four reasons: (1) countries are different, (2) the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business, (3) an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system, and (4) international transactions involve converting money into different currencies.
