Smartbook 2.0 Chapter 1: Globalization

What global institution was established on October 24, 1945, to maintain international peace and security?

United Nations

Foreign direct investment is _____.

an investment made by a company based in one country into a company or entity based in another country.

What term refers to the shift toward international economic integration?

globalization

he outward stock of foreign direct investment has _____ for the world as a whole since 1995.

increased

Evidence suggests that _____ has impacted the declining share of national income for unskilled labor more so than globalization has.

technological change

What statement accurately describes the current membership of the United Nations?

Member nations account for about 98 percent of world trade.

Select all the statements that correctly describe the demographics of the global economy a half a century ago.

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

What is an accurate depiction of Latin America when considering international business?

Substantial opportunities are present, but so are substantial risks.

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

Technological innovations and low-cost transportation have reduced the cultural distance between countries and are bringing about some convergence of consumer tastes and preferences.

True

Which U.S. president decided to pull the United States out of the Paris Accord, thereby eliminating the need for the United States to participate in limiting future CO2 emissions?

Trump

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

widened the gap between the rich and poor nations.

In the early 1990s there were fewer than 50 bilateral and regional trade agreements between two or more nations. This has changed today as there are about

300

Boeing outsources a large portion of its production. For example, for its most recent jet airliner (the 787), nearly _____ of the total value of the aircraft is outsourced to foreign companies.

65 percent

Which environmental concern has been found to rise steadily with higher-income levels?

carbon dioxide emissions

Current trends indicate that, due to the emerging economies, the world is moving _____ an economic system that is more favorable for international business.

closer to

In order to manage an international business efficiently, managers might have to

decide if it is ethical to accept the lower labor and environmental standards found in many less developed nations.

Select all the macro factors that underlie the trend toward greater globalization.

decline in trade barriers technological change

Distribution of production to separate locations has become more economical for companies because transportation costs have _____.

declined

Select the primary purposes of the United Nations, according to its charter.

develop friendly relations among nations cooperate in solving international problems be a center for harmonizing the actions of nations maintain international peace and security

Opponents of globalization are concerned that manufacturing jobs will be moved to more _____ countries.

developing

International trade occurs when a company

exports goods or services to consumers in another country.

The G20 is compromised of _____ from the 19 largest economies in the world.

finance ministers

Renata's U.S.-based lifestyle company decides to invest in a company based in France that specializes in health and wellness. This would be an example of

foreign direct investment.

When a company invests in a company or entity outside its home country, it is participating in

foreign direct investment.

Which statement best describes the involvement of small- and medium-sized U.S. businesses in exporting?

They are highly involved and account for about 98 percent of the companies that export.

What is an example of a regional trade agreement that has reduced trade barriers between nations?

USMCA

Half a century ago, which country dominated world foreign direct investment?

United States

The G20 was originally established to

formulate a coordinated policy response to financial crises in developing countries.

The globalization of markets is facilitated by the

improvement in transportation technology.

The two macro factors fueling the trend toward greater globalization are a decline in trade barriers and

technological change.

When nations lowered trade barriers it made the globalization of markets a possibility. What was needed to make this possibility a reality?

technology

Some U.S. hospitals outsource radiology work to India. This is possible because of advancements in

technology.

In terms of economic growth, current indicators suggest that

there will be stagnation among the world's poorest nations.

A manager of a(n) _____ business faces a wider and more complex range of problems than one of a(n) _____ business.

international; domestic

A company is involved in foreign direct investment when it

invests in business activities outside of its home country.

Those who support globalization argue that increasing globalization will

lead to reduced prices for goods and services.

The problems faced while managing an international business are _____ those faced while managing a purely domestic business.

more complex than

Which global institution is the successor to GATT?

the World Trade Organization

Hanson Housewares Inc., based in Tennessee, sources goods from Southeast Asia to take advantage of labor cost savings. This is an example of

the globalization of production.

Factors of production include _____.

the ingredients that go into making any good or service.

Select all the notable trends in the demographics of multinational enterprises in the last 50 years.

the rise of non-U.S. multinationals the growth of mini-multinationals

A "Black Swan" event, such as the COVID-19 pandemic, can create large negative consequences in the economy even though

there is a low probability for this type of event

Select all the factors on which Boeing's rationale for outsourcing so much production to foreign suppliers is based.

using suppliers that are the best in the world at a particular activity increasing the chance to win significant orders from airlines in those countries

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

globalization.

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.

international

Select all the primary causes of economic stagnation in the world's poorest countries.

poor property rights protection prolonged civil war totalitarian government

The decline of the United States' standing as a dominant industrial power is considered a(n) _____ decline because it reflects the faster economic growth of other economies.

relative

Select all the countries that are responsible for the largest emissions of carbon dioxide and caused international carbon emissions talks to fail until late 2014, when they agreed to potentially reduce their carbon emissions significantly.

China United States

What is an accurate depiction of containerization?

It reduces the costs of shipping goods over long distances.

How did the COVID-19 pandemic affect world trade?

It significantly impacted global supply chains.

Which argument favors globalization?

Lowering international trade barriers raises the incomes of consumers.

Which statement accurately describes the global economy in the twenty-first century?

More nations are becoming part of the developed world.

Those who promote the idea of free trade say that one way for the world's poorest countries to improve their situation is to _____.

adopt economic policies based on free market economies

During the 1920s and 1930s, when high tariffs were placed on imported manufactured goods,

an increase in trade barriers resulted.

At the shipping port in Savannah, Georgia, the large shipping boxes that arrive on superfreighters from Indonesia are unloaded directly onto a train car for transport within the United States. This demonstrates how _____ has simplified the transport of products from one mode of shipping to another.

containerization

Supporters of globalization say that critics do not understand that the benefits of free trade outweigh the

costs.

Critics of globalization protest in order to _____.

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

The globalization of markets and production implies that

domestic firms are facing intense competition from foreign firms.

The opponents of globalization argue that falling barriers to international trade

eliminate manufacturing jobs in wealthy economies.

Influential economists, politicians, and business leaders who favor globalization argue that

falling barriers to international trade drive the economy toward greater prosperity.

Being able to take advantage of the national differences in the quality of factors of production helps companies

improve the quality or functionality of their product offering.

A(n) _____ business is any firm that engages in cross-border trade or investment.

international

The purpose of the Uruguay Round negotiations was to

lower the trade barriers between various national markets.

A(n) _____ is any business that has productive activities in two or more countries.

multinational enterprise

Select all the transportation modes that have effectively reduced the size of our world, thus simplifying the transshipment from one mode of transport to another.

superfreighters commercial jets

Historically, national markets were distinct and separate entities. Today, these separate national markets have merged. This process is known as _____.

the globalization of markets

Supporters of globalization suggest that a solution to the problem of slow real income growth among unskilled workers is _____ society's investment in education.

to increase

At some point, rising income levels lead to demands for greater environmental protection and, as a result, pollution levels fall. A study by Grossman and Krueger found this generally occurred before per capita income levels reached

$8,000.

While the lowering of barriers to trade made globalization a theoretical possibility, it wasn't until the introduction of _____ that is became a reality.

technological change

The presence of McDonald's in Tokyo, the opportunity to easily buy iPads in Rio and Berlin, and the ready availability of Gap jeans in Paris as well as San Francisco are examples of

the emergence of global markets for consumer products.

The outward stock of foreign direct investment refers to the _____ of foreign investments by firms domiciled in a nation outside of that nation's borders.

total cumulative value

What is one concern voiced by critics of globalization?

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

What issue might be raised at an antiglobalization demonstration?

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

One outcome of the globalization of markets is a decrease in the intensity of competition among companies.

False

Small and medium-sized companies do not typically benefit from the globalization of markets.

False

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

False

In the years leading up to the Great Depression, what practice created a barrier to international trade?

High tariffs on imports of foreign goods

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

Internet

What is an accurate depiction of the World Bank?

It focuses on making low-interest loans to poor nations so they can invest in their infrastructure.

In the early 1960s, the United States was the world's dominant industrial power. How does the U.S. position compare today?

It has diminished in power.

In terms of international business, what is a benefit of the Internet?

It makes it easier for buyers and sellers to connect.

What does the World Trade Organization do?

It polices the world trading system and makes sure nation-states adhere to trade treaties.

What is an accurate description of the International Monetary Fund (IMF)?

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

Which organization would help out a cash-strapped government by providing it with a low-interest loan to help that country build new roads?

World Bank

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?

World Trade Organization

Creating and managing a globally dispersed production system is possible because of _____.

a decrease in the real costs of information processing and communication

The development of the microprocessor has lead to _____.

a reduction in the cost of global communications

While it is known for its peacekeeping role, the United Nations devotes nearly 70% of its work toward promoting conditions of

a vibrant global economy.

In terms of conducting international business in China, it can be said that

China represents a large market opportunity.

What is an accurate description of microprocessors?

They provide a low-cost way to process large amounts of information.

Why do companies engage in the globalization of production?

To increase their productivity or improve the quality of their product offering

The modern international trading system is based on the General Agreement on _____.

Tariffs and Trade.

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

Uruguay Round

What is the best description of the globalization of markets?

bringing traditionally separate national markets into one cohesive marketplace

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 _____.

free trade

The COVID-19 pandemic caused many businesses to rethink their globalization process because

global supply chains were severely disrupted.

The outward stock of foreign direct investment has _____ for the world as a whole since 1995.

increased

During the early years of globalization, outsourcing was primarily confined to _____ activities.

manufacturing

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.

production