Question 1

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)continued rise in the share of world output accounted for by developing nations such as China and India

Accepted Answer

The continued rise in the share of world output accounted for by developing nations such as China and India is most likely to be observed in today's global economy. These countries have experienced significant economic growth in recent years and are expected to continue to do so in the future, contributing to an increase in their share of world output. The other options are unlikely to be observed in today's global economy.

Question 2

Which statement reflects 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 United States 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.

Accepted Answer

This statement reflects the shifting global economic landscape as other countries such as Japan, Germany, and newly industrialized nations take a larger share of world exports, indicating a changing demographic in the global economy. The other answer options either incorrectly describe the situation or are irrelevant to the changing demographics of the global economy.

Question 3

Michelle,an Italian fashion designer,sells her merchandise by exporting it to the United States,United Kingdom,and Brazil.According to this information,Michelle is most likely involved in
A)foreign direct investment.
B)globalization of production.
C)international trade.
D)multinational enterprise.
E)outsourcing.

Accepted Answer

Michelle is exporting her merchandise to other countries, indicating that she is involved in international trade.

Question 4

Which of the following characterizes 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

Accepted Answer

Lowering of trade and investment barriers allows firms to base their production at optimal locations outside their home country, as they can now access foreign markets with ease. This can lead to an increase in foreign direct investment and a more efficient allocation of resources on a global scale. The other options are incorrect; protecting domestic industries from foreign competition would be a rationale for keeping trade barriers high, the Uruguay Round was focused on lowering barriers, creating an unfavorable environment for FDI would be a negative outcome of raised barriers, and the Great Depression was caused by a host of factors unrelated to trade policy.

Question 5

Richard purchased a computer for $600 in 2015.Compared to the $900 computer that he had purchased back in 2011,the new one seems to be more efficient in terms of the price he has paid and the power of the microprocessor technology.This is best explained by
A)product liability.
B)property rights.
C)Moore's law.
D)purchasing power parity.
E)sustainable strategies.

Accepted Answer

Moore's law states that the number of transistors on a microprocessor chip will double every two years, leading to an increase in computational power and a decrease in cost per transistor. This explains why Richard's new computer is more efficient than the one he bought in 2011, despite costing less.

Question 6

Gerald bought his son,David,a computer two years ago.Recently,he decided to buy 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.

Accepted Answer

According to Moore's Law, the number of transistors on a microchip doubles approximately every two years, leading to more powerful and efficient processors. Therefore, Julian's computer, purchased two years after David's, is likely to have a more advanced microprocessor.

Question 7

Which of the following identifies the motivation for much of the foreign direct investment by non-U.S.firms?
A)desire to disperse production activities to optimal locations
B)need to suppress emerging economies such as China,India,and Brazil
C)demand for skilled workers in foreign nations
D)lack of adequate environmental regulations
E)establishment of multinational treaties

Accepted Answer

The desire to disperse production activities to optimal locations is a common motivation for foreign direct investment, as firms seek to achieve economies of scale, reduce costs, and gain access to new markets. While other factors such as the availability of skilled workers and the establishment of multinational treaties may have some influence on investment decisions, they are not as significant as the desire to optimize production activities. The need to suppress emerging economies and lack of adequate environmental regulations are not legitimate motivations for foreign direct investment.

Question 8

Which of the following has seen a positive change from 1960 to 2014?
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 France
D)the share of world output accounted for by developing nations
E)prevalence of independent and self-contained national economies

Accepted Answer

The share of world output accounted for by developing nations has seen a positive change from 1960 to 2014. Developing nations have experienced a significant increase in their share of world output during this period, primarily due to industrialization and globalization.

Question 9

Which of the following countries has seen a relative decline in its share of world output between 1960 and 2014?
A)United States
B)Brazil
C)Thailand
D)China
E)South Korea

Accepted Answer

The United States has seen a relative decline in its share of world output between 1960 and 2014, partly due to the rise of other countries such as China and India. While the US economy has still grown during this period, its growth rate has been surpassed by other countries, leading to a decrease in relative share of world output.

Question 10

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.

Accepted Answer

Containerization has significantly lowered the costs of shipping goods over long distances. This is because standardized containers can be easily moved between various modes of transportation, reducing the need for manual handling and streamlining the shipping process. As a result, containerization has greatly facilitated global trade and made it more affordable for businesses to transport goods across different parts of the world.

Question 11

What was a result of the Uruguay Round?
A)increased trade and investment barriers
B)excluding the trade of services from international trade
C)transforming the World Trade Organization into the GATT
D)enhanced protection for patents,trademarks,and copyrights
E)promoting the worldwide rise of communism

Accepted Answer

The Uruguay Round resulted in enhanced protection for patents, trademarks, and copyrights through the establishment of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. This agreement sets out minimum standards for the protection and enforcement of these rights in international trade, benefiting businesses and individuals who rely on intellectual property for their livelihoods.

Question 12

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.

Accepted Answer

Foreign direct investment (FDI) refers to the investment in business activities outside a firm's home country. Therefore, the primary requirement for FDI to occur is for the firm to invest its resources in other countries. Cross-border bartering, exporting goods or services, importing goods or services, and erecting barriers to international trade do not necessarily involve the investment of resources in foreign business activities, and therefore, do not necessarily result in FDI.

Question 13

Silver Fire Electric Inc.,a U.S.-based company,has productive activities in more than two countries.As a result,it would be most appropriate to refer to Silver Fire Electric as what type of enterprise?
A)greenfield
B)universal
C)private
D)multinational
E)public

Accepted Answer

Silver Fire Electric Inc. is most appropriately referred to as a multinational enterprise because it has productive activities in more than two countries.

Question 14

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.

Accepted Answer

Developing nations such as China, India, and Brazil have seen significant growth in their economies in recent years and are expected to continue experiencing growth in the future. This presents many economic opportunities, especially for international trade and investment. Rich industrialized nations like Great Britain and Germany may still offer opportunities, but their economies are not growing as rapidly as those in developing nations. The centrally planned economies of the communist world have largely moved away from central planning and towards market-oriented systems, but they are still not as open to international trade and investment as developing nations. The United States remains an important economic power, but its economy is already highly developed, with less potential growth in the future compared to developing nations. Countries that are not members of the World Trade Organization may face more barriers to trade and investment, limiting economic opportunities.

Question 15

What are mini-multinationals?
A)multinational firms from relatively small countries in terms of area
B)multinationals from the developing nations of the world
C)multinational firms that operate in only one foreign country
D)medium-sized and small multinationals
E)subsidiaries of large multinationals in foreign countries

Accepted Answer

Mini-multinationals refer to medium-sized and small companies that have a presence in foreign markets. These firms do not have the same resources as large multinationals, but they are still able to compete in global markets.

Question 16

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 the 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

Accepted Answer

Countries progressively raising trade barriers against each other, such as through the Smoot-Hawley Tariff Act, contributed to a decrease in international trade and worsening of the worldwide economic downturn during the Great Depression.

Question 17

Which of the following refers to the total cumulative value of foreign investments?
A)Purchasing power parity
B)Multipoint pricing
C)Stock of foreign direct investment
D)Switch trading
E)Bill of lading

Accepted Answer

The stock of foreign direct investment refers to the total cumulative value of foreign investments. Purchasing power parity refers to the idea that exchange rates should adjust to make the same basket of goods and services cost the same across countries. Multipoint pricing refers to pricing strategies used by multinational corporations across different markets. Switch trading and bill of lading are not related to foreign investments.

Question 18

ABC Company,which is headquartered in the United States,has production plants in Mexico and Vietnam.According to this information,ABC company is
A)against globalization.
B)a multinational enterprise.
C)engaging in the globalization of markets.
D)engaging in international trade.
E)a local company.

Accepted Answer

A multinational enterprise has operations in multiple countries, which is true for ABC Company with its production plants in Mexico and Vietnam. The fact that the company is headquartered in the United States suggests that it is not a local company just operating within the US, and the presence of production plants in other countries indicates that it is engaging in international trade and/or the globalization of markets.

Question 19

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)the 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

Accepted Answer

The advances in communication, information processing, and transportation technologies have made it easier for companies to operate on a global scale, allowing for more efficient production and distribution of goods and services, and enabling communication among different parts of the world. These advances have made globalization a tangible reality.

Question 20

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

Accepted Answer

Prior to World War II, nations implemented high tariffs to protect their domestic industries from foreign competition. The tariffs were intended to provide a barrier to foreign goods and make them less appealing to consumers, thereby supporting the growth of domestic industries.

Quiz 1: Globalization

Which of the following is most likely to be observed in today's global economy?

Which statement reflects the changing demographics of the global economy?

Michelle,an Italian fashion designer,sells her merchandise by exporting it to the United States,United Kingdom,and Brazil.According to this information,Michelle is most likely involved in

Which of the following characterizes the lowering of trade and investment barriers?

Richard purchased a computer for $600 in 2015.Compared to the $900 computer that he had purchased back in 2011,the new one seems to be more efficient in terms of the price he has paid and the power of the microprocessor technology.This is best explained by

Gerald bought his son,David,a computer two years ago.Recently,he decided to buy 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

Which of the following identifies the motivation for much of the foreign direct investment by non-U.S.firms?

Which of the following has seen a positive change from 1960 to 2014?

Which of the following countries has seen a relative decline in its share of world output between 1960 and 2014?

The advent of containerization has

What was a result of the Uruguay Round?

For foreign direct investment (FDI) to occur,a firm should primarily

Silver Fire Electric Inc.,a U.S.-based company,has productive activities in more than two countries.As a result,it would be most appropriate to refer to Silver Fire Electric as what type of enterprise?

Due to the changing economic geography,many of tomorrow's economic opportunities are most likely to be found in the

What are mini-multinationals?

Which of the following reasons contributed to the Great Depression of the 1930s?

Which of the following refers to the total cumulative value of foreign investments?

ABC Company,which is headquartered in the United States,has production plants in Mexico and Vietnam.According to this information,ABC company is

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?

The motive behind the high tariffs imposed by nations on imports of manufactured goods,prior to World War II,was to: