Q&A Hero

Q: World Bank gives aid of $100 million to Kenya for creating rural health care facilities. This is an example of foreign direct investment. ⊚ true ⊚ false

Q: Rivers Inc., a U.S.-based sports apparel manufacturer, sets up a production unit in China to take advantage of the lower labor costs there. This is an example of foreign direct investment. ⊚ true ⊚ false

Q: "Beggar thy neighbor" retaliatory trade policies involved countries progressively increasing trade barriers against each other, which contributed to the Great Depression of the 1930s. ⊚ true ⊚ false

Q: The Uruguay Round, finalized in December 1993, enhanced protection for patents, trademarks, and copyrights. ⊚ true ⊚ false

Q: When Cyprus had a financial crisis, it went to the World Bank, known as the lender of last resort, to bail it out. ⊚ true ⊚ false

Q: Outsourcing is a process that is limited to manufacturing enterprises. ⊚ true ⊚ false

Q: Johann s business does not make consumer products; therefore, it would not be likely to participate in global markets. ⊚ true ⊚ false

Q: Global supply chain and business arbitrage can help companies lower their overall cost structure or improve the quality or functionality of their product offering. ⊚ true ⊚ false

Q: Since Wally s Whistles is a medium-size business, it wouldn t benefit from globalization. ⊚ true ⊚ false

Q: Managing an international business is different from managing a purely domestic business for which of the following reasons? A) Countries prefer to keep business transactions between domestic partners. B) The range of problems confronted is wider and more complex. C) International businesses have an added layer of U.N. regulations. D) International transactions involve exchanging currencies through each country s treasury.

Q: Which of the following is true regarding international businesses? A) All MNEs are international businesses. B) Only firms that export products are international businesses. C) Only firms that invest abroad are international businesses. D) All international businesses are MNEs.

Q: How does managing an international business differ from managing a domestic business? A) International managers are more experienced. B) Countries differ in their cultures and systems. C) Countries want to do business with their neighbors. D) Countries want to keep their transactions simple.

Q: Which of the following statements is true regarding an international business? A) An international business needs to invest directly in operations in other countries. B) An international business needs to have homogenous practices across countries. C) An international business can be managed in the same way that a domestic business is managed. D) An international business must find ways to work within the limits imposed by government intervention.

Q: Issy s Ice Cream is an international business. As such, it A) needs to have manufacturing units in at least two foreign nations. B) needs to manufacture products or provide services that target a global market. C) need not customize its products to the requirements of national markets. D) invests in international trade or investment.

Q: An international business, unlike a multinational enterprise, A) needs to have manufacturing units in at least two foreign nations. B) needs to manufacture products or provide services that target a global market. C) need not customize its products to the requirements of national markets. D) need not invest directly in operations in other countries.

Q: Which of the following is true of the supporters of debt relief for HIPCs? A) They argue that free trade alone is sufficient to bring HIPCs out of poverty. B) They argue that new democratic governments should be forced to honor debts incurred by previous corrupt predecessors. C) They include Bono, the Dalai Lama, and Jeffrey Sachs among their ranks. D) They are working against the policies of the IMF and World Bank.

Q: Which of the following is true of HIPCs? A) About 100 nations fall in this category. B) The average debt burden has never been more than 75 percent of the value of the HIPC's economy. C) Servicing heavy debt leaves HIPCs with little left to invest in public infrastructure. D) The annual cost of serving debt consumes about 30 percent of HIPC export earnings.

Q: In 2000, the United Nations established the ________ to reduce the number of people who live in extreme poverty by 2015. A) Millennium Development Goals B) Twenty-First Century Goals C) Globalization Rejuvenation Goals D) U.N. Humanistic Goals

Q: The two largest emitters of carbon dioxide are A) China and the United States. B) China and the United Kingdom. C) Canada and the United States. D) Mexico and the United States.

Q: Which of the following is a reason that little progress has been made toward the ambitious goals set at the 1992 Earth Summit in Rio de Janeiro? A) China has shown a strong appetite to adopt tighter pollution controls. B) Political cooperation in the U.S. Congress promotes domestic action. C) There is a culture of denial in the United States. D) Trade liberalization efforts have not been rolled back.

Q: Based on several studies, the data suggest that real wages A) for unskilled workers have decreased while real wages for skilled workers have increased. B) for both skilled and unskilled labor have decreased. C) for both skilled and unskilled labor have increased. D) for unskilled workers have increased while real wages for skilled worker have decreased.

Q: While the hump-shaped relationship between income levels and pollution levels seems to hold across a wide range of pollutants, _____ represent an important exception. A) sulfur dioxide emissions B) lead concentrations C) carbon dioxide emissions D) water quality standards

Q: Which of the following is viewed by large segments of the population in many countries as a detrimental effect of antiglobalization? A) job growth in industries under attack from foreign competitors B) upward pressure on the wage rates of unskilled workers C) environmental degradation D) cultural isolationism of global media and MNEs

Q: Globalization is criticized because it increases the power of A) governments to own enterprises. B) unskilled labor to form labor unions. C) supranational organizations over nation-states. D) nation-states to regulate markets and reduce competition.

Q: To be classified as an MNE, a company must have productive activities in at least ________ countries. A) two B) three C) four D) twenty

Q: If China continues to move toward greater free market reforms it A) may move from industrial superpower to third-world status. B) will likely see a decrease in GDP per capita. C) may move from third-world to industrial superpower status. D) will likely give global market share to Western and Japanese enterprises.

Q: During the past two decades, change in Latin America has been characterized by A) an increase in debt. B) hyperinflation. C) the sale of state-owned enterprises to private investors. D) protests against foreign investment.

Q: The downside of increased globalization is A) global financial contagions are less likely. B) a severe crisis in one region can affect the entire globe. C) one nation may become too powerful. D) the potential for increased exploitation of undeveloped nations by developed nations.

Q: The rise in the number of mini-multinationals means that A) small businesses are becoming increasingly involved in international trade and investment. B) it is increasingly difficult to enter the large multinational market. C) countries are working together to minimize MNE influence. D) there is greater state involvement in industry.

Q: In the last two decades, Latin American countries such as Brazil, Mexico, and Chile have A) embraced communist principles. B) promoted government ownership of enterprises. C) experienced increasing debt and inflation. D) welcomed foreign investment.

Q: Toyota is a multinational enterprise (MNE), which is a firm that A) exports its products to multiple countries. B) has production activities in more than two countries. C) does most of its business on the Internet. D) lists its securities on a public exchange.

Q: Why did many Japanese firms invest in North America and Europe in the 1970s? A) to avoid a highly competitive domestic market B) to exploit high domestic tariff barriers C) to provide a hedge against unfavorable currency movements and imposition of trade barriers D) to take advantage of low labor costs

Q: ABC Global has decided to invest resources in business activities outside its home country.This is called A) foreign direct investment (FDI). B) direct international investment (DII). C) international trade (IT). D) foreign direct production (FDP).

Q: The volume of world trade in merchandised goods has been A) growing at the same rate as world GDP. B) growing faster than world GDP. C) growing slower than world GDP. D) declining faster than world GDP.

Q: _____ predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months. A) Keynes s Law B) Say s Law C) Moore s Law D) Sullivan Principle

Q: In 2009, the financial crisis in the United States was triggered by A) the global hike in the price of crude oil. B) the slowdown in U.S. imports, due to political pressure. C) liberal lending policies by U.S. banks to homeowners. D) the artificial fixing of the currency rate by China.

Q: ________ occurs when a firm exports goods or services to consumers in another country. A) International trade B) Foreign direct investment C) Inward investment D) Outsourcing

Q: The volume of world trade in merchandise is growing faster than world GDP. This implies that A) more firms are dispersing their production processes to global locations. B) the economies of the world s nation-states are becoming more independent from each other. C) the global economy is headed for a large downward correction. D) the world is becoming poorer.

Q: Which of the following is true of the IMF? A) It is often seen as the lender of first choice to nation-states whose economies are in turmoil. B) Its loans come with no strings attached. C) It is the less controversial of the two sister institutions, the IMF and the World Bank. D) It has emerged as a significant player in the global economy.

Q: Which of the following was established to maintain order in the international monetary system? A) the WTO B) the GATT C) the World Bank D) the IMF

Q: Which of the following focuses on making low-interest loans to cash-strapped governments in poor nations that wish to undertake significant infrastructure investments? A) the WTO B) the GATT C) the World Bank D) the IMF

Q: Which of the following is a factor of production? A) tariffs B) transportation costs C) capital D) government

Q: The G20 was originally established to A) preserve peace through international cooperation and collective security. B) maintain order in the international monetary system. C) formulate a coordinated policy response to financial crises in developing nations. D) manage, regulate, and police the global marketplace.

Q: What is true about the International Monetary Fund? A) It is primarily responsible for policing the world trading system. B) It is seen as the lender of last resort to nation-states whose economies are in turmoil. C) It is responsible for establishing multinational treaties to govern the global business system. D) It was established to formulate a coordinated policy response to financial crises in developing nations.

Q: The World Trade Organization promotes A) the lowering of barriers to cross-border trade and investment. B) the development of poor nations through low-interest loans. C) state ownership of major enterprises. D) the regulation of national economies.

Q: The General Agreement on Tariffs and Trade (GATT) was responsible for A) protecting government-owned enterprises. B) promoting free trade and reducing trade barriers. C) limiting nuclear testing. D) promoting environment friendly technology.

Q: What impedes firms from achieving the optimal dispersion of their productive activities to locations around the globe? A) transportation costs B) government deregulations C) reduction of barriers to trade between countries D) reduction of barriers to foreign direct investment

Q: Early outsourcing efforts were primarily confined to A) health care. B) service activities. C) technological research. D) manufacturing activities.

Q: A U.S. investment firm set up a customer service call center in India to take advantage of lower labor costs. This is called A) homogenizing markets. B) vertical integration. C) outsourcing. D) horizontal integration.

Q: Globalization of markets results in markets becoming A) less interdependent. B) less diverse. C) more protected. D) less competitive.

Q: Since the collapse of communism over a quarter of a century ago, formerly communist nations have transformed their economies by globalizing their markets. This involves A) regulating markets. B) privatizing state-owned enterprises. C) decreasing competition. D) reducing foreign investment.

Q: The Uruguay Round provided A) reduced protection for patents, trademarks, and copyrights. B) enhanced protection for patents, trademarks, and copyrights. C) increased trade barriers. D) reduced coverage of services and manufactured goods.

Q: In 2008 and 2009, the _____ became the forum through which major nations attempted to launch a coordinated policy response to the global financial crisis, which started in America. A) GATT B) Group of Ten (G10) C) Group of Twenty (G20) D) World Trade Organization

Q: ________ refers to the shift toward a more integrated and interdependent world economy. A) Outsourcing B) International marketing C) Privatization D) Globalization

Q: Discuss the impact of technological change and automation on global markets.

Q: Explain the trends in world trade and foreign direct investment since 1950.