Question 1

Which of the following is NOT true regarding competitive markets?
A) Successfully globalized economies strive to attain competitive markets at home.
B) Governments try to minimize the role of state-owned enterprises in market economies.
C) Regulations that promote free domestic markets also tend to promote globalization.
D) Antitrust laws must be eliminated if competitive markets re to be sustained.
E) Antitrust laws interfere with the natural growth of successful businesses.

Accepted Answer

Antitrust laws are necessary to prevent monopolies and promote competition in a market. Eliminating antitrust laws would lead to the formation of monopolies, which would harm the market by limiting consumer choice and increasing prices.

Question 2

There appears to be a clear connection between economic freedom and political freedom.

Accepted Answer

Studies have shown that countries with high levels of economic freedom also tend to have higher levels of political freedom. This is because economic freedom often leads to the development of a strong civil society, which in turn demands political rights and freedoms. Additionally, a lack of economic freedom can often lead to corruption and authoritarianism. Therefore, there is a positive relationship between economic freedom and political freedom.

Question 3

Which of the following is NOT true regarding globalization?
A) It guarantees that quality of life for all people will increase.
B) It creates winners and losers.
C) It has the potential to increase the quality of life for people.
D) Some multinational companies will utilize globalization may try to pay substandard wages to the workers they employ in developing countries.
E) Export barriers may need to be imposed by the WTO to help regulate the actions of multinational companies.

Accepted Answer

Globalization does not guarantee that quality of life for all people will increase. While it has the potential to increase the quality of life, it also creates winners and losers and some multinational companies may try to pay substandard wages to workers in developing countries. The WTO may need to impose export barriers to regulate the actions of these companies.

Question 4

The openness and proliferation of globalization and free trade rules can best be attributed to the interwar period between World War I and II.

Accepted Answer

The interwar period was characterized by protectionist measures and economic nationalism, such as the imposition of tariffs and quotas. It was not until after World War II that countries began to embrace and promote free trade as a means of promoting economic growth and stability.

Question 5

Globalized economies like New Zealand and Singapore rank at the top in index for absence of corruption by Transparency International.

Accepted Answer

Transparency International's Corruption Perceptions Index consistently ranks New Zealand and Singapore among the top countries for absence of corruption.

Question 6

The International Bank for Reconstruction and Development performs which of the following functions?
A) Provides long-term low-interest social sector and infrastructure loans to the poorest members utilizing foreign aid funds provided by rich nation members
B) Provide loans and take equity position in private companies of developing countries and works toward developing capital markets in those economies
C) Supports reconstruction and restructuring of member countries utilizing funds raised in international capital markets
D) Provides political risk coverage for private investments made in developing countries
E) Works on issues related to foreign investment disputes

Accepted Answer

The International Bank for Reconstruction and Development (IBRD) is a part of the World Bank Group and its main function is to provide loans for the reconstruction and development of member countries. These loans are funded by international capital markets, and the IBRD also provides technical assistance to support the restructuring of economies. The other options listed describe functions of other organizations within the World Bank Group, such as the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).

Question 7

Countries that have successfully adapted to globalization realize that they cannot succeed without high-quality government management at home.

Accepted Answer

Countries that have successfully adapted to globalization have invested in their government institutions, provided quality education to their citizens and created a conducive environment for businesses to thrive. This has helped in promoting economic growth and development, reducing poverty and ensuring stability.

Question 8

For the World Trade Organization,increasing trade barriers has been one of the most simple ways to encourage trade and globalization.

Accepted Answer

The World Trade Organization's objective is to reduce trade barriers and promote free trade among its members. Increasing trade barriers would go against its mission.

Question 9

In communist and state-controlled economies like those in Central Asia property rights either do not exist or are not well defined which discourages domestic and foreign investors from making long-term commitments in these countries.

Accepted Answer

In communist and state-controlled economies, property rights are either non-existent or poorly defined, making it difficult for investors to make long-term commitments.

Question 10

With business becoming increasingly global,its success,fortunately,depends only on the domestic environment.

Accepted Answer

Business success also depends on external factors like international trade policies, exchange rates, cultural nuances, and geopolitical risks.

Question 11

What was the initial primary role of the World Bank? A) To aide in the reconstruction of Europe after World War II B) To provide low-interest mortgage loans to minorities C) To try to avoid a repetition of the disastrous economic policies that had contributed to the Great Depression. D) To deal primarily with tariff negotiations E) To provide loans and take equity position in private companies

Accepted Answer

The initial primary role of the World Bank, established in 1944, was to aid in the reconstruction and development of territories of its members by facilitating the investment of capital for productive purposes, including the reconstruction of Europe after World War II.

Question 12

Text messaging will likely be an unimportant component of emerging economies' mobile phone usage because most people in these countries cannot read or write.

Accepted Answer

While there may be some populations within emerging economies who are illiterate, text messaging is still a popular and important communication method even in areas with lower literacy rates. Additionally, there are features such as voice-to-text and visual icons that can make text messaging accessible to a wider range of individuals.

Question 13

Critics argue that open trade and foreign direct investment always take jobs from workers in developing economies and transfer them to workers in advanced industrial countries which leave the workers in the developing country,out of work.

Accepted Answer

While it is true that open trade and foreign direct investment can lead to job displacement, it is not always the case that jobs are transferred from developing economies to advanced industrial countries. In fact, foreign direct investment can create jobs in developing economies by bringing in new technologies, knowledge, and capital. Additionally, open trade can lead to increased exports and economic growth in developing countries, which can in turn create employment opportunities. Therefore, it is not always accurate to say that open trade and foreign direct investment always take jobs from workers in developing economies.

Question 14

As part of the World Bank's Strategic Framework,there are five focus areas that accommodate and facilitate the globalization process including its analytical and advisory role supporting national policies to strengthen free market institutions and infrastructure that has provided the potential for creating large gains from trade.

Accepted Answer

The statement accurately reflects the focus areas of the World Bank's Strategic Framework.

Question 15

Key aspects of globalization include the elimination of barriers to trade and information technology.

Accepted Answer

Globalization is represented by the elimination or reduction of barriers to trade such as tariffs, quotas, and other restrictions, as well as the advancement of information technology which has made communication, transportation, and access to information easier and faster.

Question 16

The world economy is quickly shifting away from countries with emerging economies.

Accepted Answer

There is no evidence to support the claim that the world economy is quickly shifting away from countries with emerging economies. In fact, many emerging economies, such as China and India, continue to grow and play an increasingly important role in the global economy.

Question 17

The foundations of the globalized business world are political-and so are the biggest threats to the system.

Accepted Answer

Political decisions made by governments have a significant impact on international trade, investment, and economic relationships, which are foundations of the globalized business world. Political events such as wars, trade disputes, and changes in government policies can disrupt these foundations and pose threats to the globalized business world.

Question 18

The "soft" qualities essential to globalization include openness,protectionism,accountability,connectivity,democracy,and centralization.

Accepted Answer

The "soft" qualities essential to globalization include openness, accountability, connectivity, democracy, and decentralization, not protectionism and centralization.

Question 19

Trade without discrimination,freer trade,predictability,promotion of fair competition,and _____ are the five principles of the multilateral trading system.
A) integrated capital markets
B) encouragement of economic reform in developing countries
C) liberalization of the trading system
D) nontariff trade
E) establishment of "most favored nation" status

Accepted Answer

Encouragement of economic reform in developing countries is one of the five principles of the multilateral trading system, alongside trade without discrimination, freer trade, predictability, and promotion of fair competition.

Question 20

A sustainable decoupling process would eventually lead to a multi-polar world-a world economy in which the engines of growth could comprise the United States,the European Union,China,India,Brazil,Russia,and South Africa rather than the United States alone.

Accepted Answer

A sustainable decoupling process would lead to a more balanced and diversified world economy, with multiple countries contributing to global growth, rather than relying solely on the United States.

Quiz 1: The Rise of Globalization

Which of the following is NOT true regarding competitive markets?