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Global Business Today 9th Edition Test Bank

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    1 Student: ___________________________________________________________________________ 1. As a result of globalization, we have been moving toward a world in which national economies are relatively self - contained entities. True False 2. By offering the same basic product worldwide, firms help to create a global market. True False 3. As a result of globalization, companies rarely need to customize marketing strategies, product features, and operating practices in different countries. True False 4. Substantial impediments, such as barriers to foreign direct investment, make it difficult for firms to achieve the optimal dispersion of their productive activities to locations around the globe. True False 5. The World Trade Organization, the International Monetary Fund and its sister institution the World Bank, and the United Nations were all created by voluntary agreement between individual nation - states. True False 6. The WTO is 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 False 7. The IMF is less controversial than its sister institution, the World Bank. True False 8. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country. True False 9. After World War II, the advanced nations of the West committed themselves to increasing barriers to the free flow of goods, services, and capital between nations. True False

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    10. The Uruguay Round extended GATT to cover services as well as manufactured goods. True False 11. The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity. True False 12. As a result of international trade, the economies of the world's nation - states are becoming less intertwined. True False 13. The globalization of markets and production and the resulting growth of world trade, foreign direct investment, and imports all imply that firms are finding it easier to protect themselves from attack by foreign competitors. True False 14. Containerization has revolutionized the transportation business, significantly lowering the costs of shipping goods over long distances. True False 15. The real costs of information processing and communication have fallen dramatically in the past two decades. True False 16. The United States accounted for a significantly larger share of the world economy in 2012 than it did in the 1960s. True False 17. Beginning in the 1970s, European and Japanese firms began to shift labor - intensive manufacturing operations from developing nations to their home countries where labor costs were lower. True False 18. The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country. True False

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    19. Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically. True False 20. Although most international trade and investment are still conducted by large firms, many medium - size and small businesses are becoming increasingly involved in international trade and investment. True False 21. Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic policies and free market economies. True False 22. The move toward a global economy has strengthened the adoption of conservative economic policies by developing nations. True False 23. According to many influential economists, the increase in international trade and cross - border investment will result in an increase in the prices of goods and services. True False 24. It is possible that economic growth in developed nations has offset the fall in the share of national income enjoyed by unskilled workers, raising their living standards. True False 25. The growing income inequality is a result of the wages for skilled workers being discounted. True False 26. In general, as countries get richer, they enact tougher environmental and labor regulations. True False 27. Highly indebted poor countries (HIPCs) can bootstrap themselves out of poverty by pursuing retaliatory trade policies rather than free trade policies. True False 28. Managers in an international business must find ways to work around the limits imposed by specific governmental institutions. True False

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    29. Despite all the talk about the emerging global village, differences between countries such as cultures and political systems are very profound and enduring. True False 30. As a result of globalization, international businesses can avoid the haggle of currency exchanges during cross - border transactions. True False 31. Which of the following has been reduced as a result of globalization? A. Volume of goods and services B. Foreign exchange transactions C. Environment and labor laws D. Differences in material culture E. Regulation of markets 32. What is the shift toward a more integrated and interdependent world economy called? A. International trade B. Foreign direct investment C. Globalization D. Moore's Law E. Containerization 33. Automobile companies promote different car models in different countries depending on a range of factors such as demographics, local taste, local fuel costs, income levels, traffic congestion, and cultural values. This most likely demonstrates that: A. significant differences still exist among national markets. B. cultural diversity has been replaced by global uniformity. C. the global market is less complex than national markets. D. only multinational giants can benefit from the globalization of markets. E. the social norms in a country do not affect purchase decisions of consumers.

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    34. Which of the following statements best supports the claim that greater uniformity replaces diversity in the context of global markets? A. Differences in business systems and legal regulations lead companies to customize their marketing strategies, product features, and operating practices to best match conditions in a particular country. B. As rival global firms follow each other across countries, they bring with them their brand names, products, and marketing strategies from other national markets, thus creating homogeneity across markets. C. Truly innovative companies succeed by developing products that serve specific needs of the local markets. D. The volume of goods, services, and investment crossing national borders has expanded at a slower rate than world output for more than half a century. E. The most global of markets are not typically markets for consumer products, as significant differences in consumer tastes and preferences still exist among national markets. 35. Which of the following 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 such as labor, energy, land, and capital? A. Globalization of markets B. Containerization of production C. Dispersal of production D. Globalization of production E. Industrialization of markets 36. Which of the following best illustrates the globalization of production? A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to India for the cutting process. B. Evan Swan, a U.S. - based fashion designer, is planning to open a flagship store in China to serve the Asian market. C. Uncle Crab, a U.K. fast food chain, has been serving customers worldwide through its franchises. D. Silver Unicorn Inc. uses sales personnel from the respective host country to sell its products and services. E. Pizza Gallery, an Italian pizza chain, customizes its pizzas and pastas to suit the tastes of its American and Australian customers.

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    37. West Electronic Corporation sources goods and services for its electronics products from different locations around the globe in an attempt to take advantage of differences in the cost and quality of labor and land. This practice demonstrates the: A. globalization of production. B. globalization of markets. C. dislocation of a developing nation's economy. D. restriction on foreign direct investment. E. regulation of the environment. 38. Early outsourcing efforts were primarily confined to: A. accounting services. B. manufacturing activities. C. testing services. D. educational activities. E. consulting services. 39. Which of the following services CANNOT be outsourced to foreign nations? A. Debugging software B. Handling consumer queries C. Transcribing medical files D. Interpreting MRI scans E. Delivering closing arguments for a lawsuit 40. Which of the following was established after the Uruguay Round to police the international trading system? A. United Nations B. International Monetary Fund C. Group of Twenty D. World Trade Organization E. World Bank 41. Why was the World Bank set up? A. To preserve peace through international cooperation B. To promote economic development C. To maintain order in the international monetary system D. To formulate a coordinated policy response to financial crises E. To police the world trading system

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    42. Which of the following is an argument put forth by critics of the IMF? A. It increases barriers to the free flow of goods and investment across national borders. B. It provides assistance only to developing nations and completely ignores the developed nations. C. It is not powerful enough to ensure that the nation - states adhere to the rules laid down in trade treaties. D. It promotes the rise of communism across the globe. E. It usurps the sovereignty of nation - states by telling governments what economic policies they must adopt. 43. According to the UN Charter, one of the four purposes of the UN is to: A. be a center for harmonizing the actions of nations. B. encourage high tariffs on imports of manufactured goods. C. provide enhanced protection for patents. D. promote the establishment of multinational treaties. E. facilitate globalization of production. 44. Who, along with representatives from the European Union and the European Central Bank, represent the 19 largest economies in the world on the G20? A. Finance ministers and central bank governors B. Presidents and defense ministers C. Prime ministers and army chiefs D. International trade ministers E. Ministers of foreign affairs 45. Which of the following is a macro factor underlying the trend toward greater globalization? A. Rise of communism across the globe B. Increase in nationalization of private organizations C. Increase in diversity in consumer tastes and preferences D. Increase in trade regulations across the globe E. Dramatic developments in information processing and other technologies

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    46. Which of the following best exemplifies foreign direct investment (FDI)? A. Pure Pearls, a jewelry store in the United States, imports harvested pearls from Indonesia, Philippines, and Australia. B. Chivalry, a U.S. - based phone manufacturing company, has set up its own assembly plant in Japan to cater to the needs of the Asian market. C. Delicate Love, a reputable florist company in Holland, exports tulips and roses throughout the globe. D. Samantha started an Italian restaurant in her home country, the United States, after she took cooking lessons from a well - known chef in Italy. E. Yin and Yang Inc., a Chinese firm, supplies buttons and zippers to major denim brands in the United Kingdom. 47. Michelle, an Italian fashion designer, sells her merchandise by exporting them 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. 48. 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. 49. The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World War II, was to: A. deter any possible attempts to promote communism. B. protect domestic industries from foreign competition. C. prevent the occurrence of the Great Depression. D. safeguard patents, copyrights, and trademarks. E. promote the trade of services over the trade of manufactured goods.

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    50. 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 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 51. The 1993 Uruguay Round: A. increased trade and investment barriers. B. excluded the trade of services from international trade. C. transformed the World Trade Organization into the GATT. D. provided enhanced protection for patents, trademarks, and copyrights. E. promoted the worldwide rise of communism. 52. Which of the following was a part of the agenda of the Doha Round of talks launched by the WTO? A. Limiting the use of antidumping laws B. Abolishing the International Monetary Fund C. Increasing tariffs on industrial goods, services, and agricultural products D. Persuading member governments to cut defense spending E. Establishing GATT as a replacement for the WTO 53. 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. 54. Which of the following has been declining in the developing nations of the world such as China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil? A. Economic opportunities for international trade B. Industrialization C. Contribution toward the share of world output D. The stock of foreign direct investment E. Barriers to the free flow of goods, services, and capital

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    55. 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 56. 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. 57. Richard purchased a computer for $600 in 2014. Compared to the $900 computer that he had purchased way back in 2010, 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. 58. 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.

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    59. 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. Rapid rise in the share of world output accounted for by developing nations such as China and India 60. Which of the following countries has seen a relative decline in its share of world output between 1960 and 2012? A. United States B. Thailand C. Japan D. China E. South Korea 61. Which of the following statements 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. 62. Which of the following has seen a positive change from 1960 to 2012? 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 Japan D. The share of world output accounted for by developing nations E. Prevalence of independent and self - contained national economies

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    63. 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. 64. Which of the following identifies the motivation for much of the foreign direct investment by non - U.S. firms? A. The desire to disperse production activities to optimal locations B. The need to suppress emerging economies such as China, India, and Brazil C. The demand for skilled workers in foreign nations D. The lack of adequate environmental regulations E. The establishment of multinational treaties 65. 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 66. 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

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    67. 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 68. Which of the following statements reflects the trend in the changing nature of multinational enterprises? A. Global business activity is increasingly being dominated by large U.S. multinational corporations. B. The number of medium - size and small multinationals is decreasing continuously. C. The ranks of the world's largest 100 multinationals are dominated by firms from developing economies. D. The Internet is increasing the barriers that small firms face in building international sales. E. International business is conducted not just by large firms but also by medium - size and small enterprises. 69. Universal Lingo, a U.K. - based language translation company employing just 65 people worldwide, has an annual turnover of $1.5 million. In this context, Universal Lingo is most likely to be classified as a(n): A. large domestic firm. B. mini - multinational firm. C. greenfield firm. D. foreign firm. E. multinational giant. 70. Which of the following conditions is most likely to act as a deterrent for foreign firms willing to do business with former communist nations of East Europe and central Asia? A. The high levels of economic development in these countries B. The signs of growing unrest and totalitarian tendencies seen in these countries C. A strong commitment to market - based economic systems seen in these countries D. The collapse of communism in these countries E. Low returns involved in doing business in these countries

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    71. In the past two decades, the majority of Latin American countries have: A. experienced a decline in the health of their economies. B. sold state - owned enterprises to private investors. C. been characterized by low growth, high debt, and hyperinflation. D. restricted investment by foreign firms. E. discouraged both democracy and free market reforms. 72. Which of the following statements reflects the nature of the global economy of the twenty - first century? A. National economies are becoming less integrated into a single and interdependent economic system. B. The number of nations joining the ranks of the developed world has reduced. C. Countries have extensively adopted liberal economic policies. D. There are fewer instances of state - owned businesses privatized and markets being opened to more competition. E. The world is currently moving toward an economic system that is more unfavorable for international business. 73. Which of the following statements is a general implication of globalization? A. Globalization is inevitable. B. From a purely economic perspective, globalization is all good. C. Globalization has no negative impacts on the economies of the developed world. D. Globalization has reduced the risks associated with global financial contagion. E. As a result of globalization, a severe crisis in one region of the world can affect the entire globe. 74. An argument in support of the falling barriers to international trade and investment is that the falling barriers: A. prohibit countries from specializing in the production of goods and services. B. drive the global economy toward greater prosperity. C. reduce the need to export jobs overseas. D. increase the bargaining power of business firms by decreasing the incomes of consumers. E. reduce attacks from foreign competitors.

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    75. "Exporting jobs" to low - wage nations has contributed to: A. higher living standards in those countries that "export" the jobs. B. higher unemployment in wealthy advanced economies such as the United States. C. an increase in the income levels in those nations that "export" the jobs. D. lower standards of living in those countries to which the jobs are exported. E. reduced specialization in the production of goods and services. 76. Which of the following has increased in the United States as a result of globalization? A. Unemployment rate B. Price of goods and services C. Demand for unskilled workers D. Standard of living E. Income equality between workers in skilled and unskilled sectors 77. Supporters of globalization insist that dislocation in the form of lost jobs is a trade - off that will ultimately lead to the economy being better off. Which of the following is being justified in this case? A. Protectionism and retaliatory trade policy B. Free trade of goods and services C. Rise of communism D. High tariff on imports of manufactured goods E. The need to be a self - contained nation 78. Critics of globalization say that exporting jobs to low - wage nations results in higher unemployment and lower living standards in their home nations. Which of the following statements does NOT support this argument? A. Globalization destroys manufacturing jobs in wealthy advanced economies. B. Globalization demonstrates a structural adjustment to a more integrated global economy. C. Globalization results in depressed wages in developed nations. D. Globalization leads to economic dislocation in most cases. E. Globalization induces a decline in the share of labor in national income.

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