SOM 354 CH 1

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1. The 1993 Uruguay Round: D. provided enhanced protection for patents,

trademarks, and copyrights.
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.

2. 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.
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.

3. The advent of containerization has: C. significantly lowered the costs of shipping
goods over long distances.
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.

4. An argument in support of the falling barriers to international trade and B. drive the global economy toward greater
investment is that the falling barriers: prosperity.

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.

5. Automobile companies promote different car models in different countries depending on a A. significant differences still exist
range of factors such as demographics, local taste, local fuel costs, income levels, traffic among national markets.
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B. cultural diversity has been replaced by global uniformity.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.

6. A concern voiced by critics of globalization is that today's increasingly interdependent global A. supranational organizations
economy shifts economic power toward: such as the World Trade
Organization.
A. supranational organizations such as the World Trade Organization.

B. the communist states of eastern Europe and central Asia.

C. the medium-size and small U.S. multinationals.

D. the national governments of the countries participating in globalization.

E. nations that have authoritarian forms of government.

7. Critics of globalization say that exporting jobs to low-wage nations results in higher B. Globalization demonstrates a
unemployment and lower living standards in their home nations. Which of the following structural adjustment to a more
statements does NOT support this argument? integrated global economy.

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.

8. Due to the changing economic geography, many of tomorrow's economic opportunities are D. developing nations of the
most likely to be found in the: world such as China, India, and
Brazil.
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.
9. Early outsourcing efforts were primarily confined to: B. manufacturing activities.

A. accounting services.

B. manufacturing activities.

C. testing services.

D. educational activities.

E. consulting services.
10. "Exporting jobs" to low-wage nations has contributed to: B. higher unemployment in wealthy
advanced economies such as the United
A. higher living standards in those countries that "export" the jobs. States.

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.

11. For foreign direct investment (FDI) to occur, a firm should primarily: B. invest resources in business activities
outside its home country.
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.

12. Free trade alone, some argue, is a necessary but not sufficient prerequisite to help the D. large-scale debt relief.
world's poorest countries bootstrap themselves out of poverty. They also recommend:

A. a highly regulated command economy.

B. weaker property rights laws.

C. weaker labor regulations.

D. large-scale debt relief.

E. rapid expansion in population.

13. Gerald bought his son, David, a computer two years ago. Recently, he decided to buy D. the microprocessor in Julian's
his daughter, Julian, a computer of her own. In the context of the two-year gap computer will be more advanced in
between the purchase of both the computers and Moore's law, it is most likely that: terms of power than that of David's.

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.
14. Globalization critics argue that the decline in unskilled wage rates in advanced A. migration of low-wage
economies is due to the: manufacturing jobs offshore.

A. migration of low-wage manufacturing jobs offshore.

B. technology-induced shift toward jobs that require significant education and skills.

C. increased supply of highly skilled workers.

D. decreasing demand for unskilled workers in developing nations.

E. reducing national differences in the cost of labor between developed and

developing nations.
15. Growing income inequality between the skilled and unskilled workers in advanced A. wages for skilled workers being bid
nations, such as the United States, is a result of the: up by the labor market and the wages
for unskilled workers being discounted.
A. wages for skilled workers being bid up by the labor market and the wages for
unskilled workers being discounted.

B. decrease in the outsourcing of low-wage manufacturing jobs offshore and a

corresponding increase in demand for unskilled workers.

C. shift within advanced economies toward jobs where the only qualification is the
willingness to turn up for work every day.

D. increasing wage gap between developing and developed nations.

E. shortage of unskilled workers and an excess supply of highly skilled workers.

16. In the context of the environment, globalization critics argue that: B. adhering to labor and environmental
regulations significantly increases the costs of
A. free trade discourages firms from advanced nations to move manufacturing manufacturing enterprises.
facilities to less developed countries.

B. adhering to labor and environmental regulations significantly increases the

costs of manufacturing enterprises.

C. manufacturing enterprises are put at a competitive disadvantage by moving

their production facilities to nations that do not have burdensome regulations.

D. as countries get richer, they relax their environmental and labor regulations.

E. while pollution levels are rising in the world's richer countries, they have been
falling in developing nations.
17. In the past two decades, the majority of Latin American countries have: B. sold state-owned enterprises to private
investors.
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.

18. The lowering of trade and investment barriers: C. allows firms to base production at optimal
locations outside their home country.
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.

19. Michelle, an Italian fashion designer, sells her merchandise by exporting them to C. international trade.
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.
20. The minimum that a firm has to do to engage in international business is to: A. export or import
products from other
A. export or import products from other countries. countries.

B. invest directly in operations in another country.

C. establish joint ventures or strategic alliances with companies in other countries.

D. export low-wage manufacturing jobs to companies in other countries.

E. develop franchises and subsidiaries in other countries.

21. The motive behind the high tariffs imposed by nations on imports of manufactured goods, prior to World B. protect domestic
War II, was to: industries from
foreign competition.
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.

22. The NAFTA was formed in 1994 between: A. Canada, Mexico,
and the United
A. Canada, Mexico, and the United States. States.

B. the United States, Brazil, and Argentina.

C. Canada, Argentina, and Mexico.

D. Colombia, Venezuela, and Brazil.

E. Uruguay, Colombia, and Costa Rica.

23. Richard purchased a computer for $600 in 2014. Compared to the $900 computer that he had purchased C. Moore's law.
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.
24. Ryan is the executive general manager of a U.S. multinational and Veronica is a manager in a similar E. Choosing an
position, but works for another U.S. company that operates only in its home country. In this context, appropriate mode for
which of the following business functions will be most typically exclusive to Ryan? entering a particular
foreign country
A. Marketing a product or service

B. Maintaining healthy relations with the U.S. government

C. Planning on a business strategy

D. Adhering to labor and environmental standards

E. Choosing an appropriate mode for entering a particular foreign country

25. Silver Fire Electric Inc., a U.S.-based company, has productive activities in more than two countries. D. Multinational
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
26. Supporters of globalization insist that dislocation in the form of lost jobs is a trade-off that will B. Free trade of goods
ultimately lead to the economy being better off. Which of the following is being justified in this case? and services

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

27. Universal Lingo, a U.K.-based language translation company employing just 65 people worldwide, has B. mini-multinational
an annual turnover of $1.5 million. In this context, Universal Lingo is most likely to be classified as firm.
a(n):

A. large domestic firm.

B. mini-multinational firm.

C. greenfield firm.

D. foreign firm.

E. multinational giant.
28. West Electronic Corporation sources goods and services for its electronics A. globalization of production
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.

29. What are mini-multinationals? D. Medium-sized and small 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

30. What is the shift toward a more integrated and interdependent world economy C. Globalization
called?

A. International trade

B. Foreign direct investment

C. Globalization

D. Moore's Law

E. Containerization
31. Which of the following best exemplifies foreign direct investment (FDI)? B. Chivalry, a U.S.-based phone
manufacturing company, has set up its own
A. Pure Pearls, a jewelry store in the United States, imports harvested pearls from assembly plant in Japan to cater to the needs
Indonesia, Philippines, and Australia. of the Asian market.

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.
32. 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
A. Daily Diamonds Inc. buys diamonds from South Africa and exports them to cutting process.
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.
33. Which of the following conditions is most likely to act as a deterrent for B. The signs of growing unrest and totalitarian
foreign firms willing to do business with former communist nations of East tendencies seen in these countries
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

34. Which of the following countries has seen a relative decline in its share of A. United States
world output between 1960 and 2012?

A. United States

B. Thailand

C. Japan

D. China

E. South Korea
35. Which of the following has been declining in the developing nations of the world such as E. Barriers to the free flow of
China, India, Russia, Indonesia, Thailand, South Korea, Mexico, and Brazil? goods, services, and capital

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

36. Which of the following has been reduced as a result of globalization? D. Differences in material culture

A. Volume of goods and services

B. Foreign exchange transactions

C. Environment and labor laws

D. Differences in material culture

E. Regulation of markets
37. Which of the following has increased in the United States as a result of globalization? A. Unemployment rate

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

38. Which of the following has seen a positive change from 1960 to 2012? D. The share of world output
accounted for by developing
A. Growth of the centrally planned economies of the communist world nations

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

39. Which of the following identifies the motivation for much of the A. The desire to disperse production activities to optimal
foreign direct investment by non-U.S. firms? locations

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

40. Which of the following is a macro factor underlying the trend E. Dramatic developments in information processing and other
toward greater globalization? technologies

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
41. Which of the following is an argument put forth by critics of the E. It usurps the sovereignty of nation-states by telling
IMF? governments what economic policies they must adopt.

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.
42. Which of the following is a power of the WTO? D. It can issue a ruling instructing a member-state to change
trade policies that violate GATT regulations.
A. It can restrict the membership of nations in other supranational
organizations such as the United Nations.

B. It can grant loans to cash-strapped governments in poor nations.

C. It supersedes IMF and has complete authority over IMF's actions.

D. It can issue a ruling instructing a member-state to change trade

policies that violate GATT regulations.

E. It can make decisions related to international trade without

considering the collective interests of member-states.
43. Which of the following is most likely to be observed in today's E. Rapid rise in the share of world output accounted for by
global economy? developing nations such as China and India

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
44. Which of the following is NOT a concern for managers in B. Perceived distance between home country and operating
international businesses? nations

A. Fundamental differences in culture

B. Perceived distance between home country and operating nations

C. Government restrictions on international trade

D. Cross-border transactions involving currency exchange

E. Ethical adherence to environmental standards

45. Which of the following is the most appropriate solution to the problem of rising carbon C. Get the nations of the world to
dioxide emissions in developed economies? agree to policies designed to limit
pollutant emissions.
A. Roll back the trade liberalization efforts that have fostered economic growth and
globalization.

B. Tie free trade agreements to the implementation of fewer environmental and labor
laws in less developed countries.

C. Get the nations of the world to agree to policies designed to limit pollutant emissions.

D. Increase the export of low-wage manufacturing jobs to developing nations.

E. Restrict international trade and investment only to services.

46. Which of the following reasons contributed to the Great Depression of the 1930s? E. Countries progressively raising
trade barriers against each other
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

47. Which of the following refers to the sourcing of goods and services from locations around D. Globalization of production
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
48. Which of the following refers to the total cumulative value of foreign investments? C. Stock of foreign direct investment

A. Purchasing power parity

B. Multipoint pricing

C. Stock of foreign direct investment

D. Switch trading

E. Bill of lading
49. Which of the following services CANNOT be outsourced to E. Delivering closing arguments for a lawsuit
foreign nations?

A. Debugging software

B. Handling consumer queries

C. Transcribing medical files

D. Interpreting MRI scans

E. Delivering closing arguments for a lawsuit

50. Which of the following statements best supports the claim that B. As rival global firms follow each other across countries, they
greater uniformity replaces diversity in the context of global bring with them their brand names, products, and marketing
markets? strategies from other national markets, thus creating
homogeneity across 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.
51. Which of the following statements is a general implication of E. As a result of globalization, a severe crisis in one region of
globalization? the world can affect the entire globe.

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.
52. Which of the following statements reflects the changing A. U.S. dominance in export markets has waned as Japan,
demographics of the global economy? Germany, and a number of newly industrialized countries have
taken a larger share of world exports.
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.
53. Which of the following statements reflects the nature of the C. Countries have extensively adopted liberal economic
global economy of the twenty-first century? policies.

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.
54. Which of the following statements reflects the trend in the E. International business is conducted not just by large firms but
changing nature of multinational enterprises? also by medium-size and small 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.
55. Which of the following statements supports the claim that the gap B. A quarter of the countries with a GDP per capita of
between the rich and poor nations of the world has gotten wider less than $1,000 in 1960 had growth rates of less than
because of globalization? zero from 1960 to 1995.

A. There are many countries that suffer from totalitarian governments.

B. A quarter of the countries with a GDP per capita of less than $1,000
in 1960 had growth rates of less than zero from 1960 to 1995.

C. There is a rapidly growing population in many developing nations.

D. Unelected bureaucrats limit a nation's ability to control its own

destiny.

E. Endemic corruption has long been a problem in the national

governments of developing nations.
56. Which of the following was a part of the agenda of the Doha Round of A. Limiting the use of antidumping laws
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

57. Which of the following was established after the Uruguay Round to D. World Trade Organization
police the international trading system?

A. United Nations

B. International Monetary Fund

C. Group of Twenty

D. World Trade Organization

E. World Bank
58. While the lowering of trade barriers made globalization of markets and A. The advances in communication,
production a theoretical possibility, which of the following has made it a tangible information processing, and transportation
reality? technologies

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

59. Who, along with representatives from the European Union and the European A. Finance ministers and central bank
Central Bank, represent the 19 largest economies in the world on the G20? governors

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

60. Why was the World Bank set up? B. To promote economic development

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