Chapter 01Globalization True / False Questions 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. A company has to be the size of a multinational giant to facilitate, and benefit from, the globalization of markets. True False 4. As a result of globalization, companies rarely need to customize marketing strategies,product features, and operating practices in different countries. True False 5. Globalization has resulted in greater uniformity replacing diversity across national markets. True False 6. As firms follow each other around the world, they bring with them many of the assetsthat served them well in other national markets. Thus, greater diversity replaces uniformity. True False 7. 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 1-1© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distributionin any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.8. 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 9. The International Monetary Fund and the World Bank were both created in 1944 by 44 nations that met at Bretton Woods, New Hampshire. True False 10. 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 11. The IMF is less controversial than its sister institution, the World Bank. True False 12. In return for loans, the IMF requires nation-states to adopt specific economic policies aimed at returning their troubled economies to stability and growth. True False 13. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country. True False 14. 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 15. The Uruguay Round, held under the umbrella of GATT, extended GATT to cover services as well as manufactured goods. True False 16. The lowering of trade and investment barriers allows firms to base production at the optimal location for that activity. True False 17. As a result of international trade, the economies of the world’s nation-states are becoming less intertwined. True False 1-2© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distributionin any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.18. 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 the attack of foreign competitors. True False 19. Containerization has revolutionized the transportation business, significantly loweringthe costs of shipping goods over long distances. True False 20. While advances in telecommunications are creating a global audience, advances in transportation are creating a global village. True False 21. The real costs of information processing and communication have fallen dramatically in the past two decades. True False 22. The Internet has been a major force facilitating international trade in services. True False 23. Countries that markedly increased their share of world output from 1960 to 2010 included Germany, France, and the United Kingdom. True False 24. The United States accounted for a significantly larger share of the world economy in 2011 than it did in the 1960's. True False 25. 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 26. The stock of foreign direct investment refers to the total cumulative value of foreign investments in a country. True False 1-3© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distributionin any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.27. Throughout the 1990s, the amount of investment directed at both developed and developing nations increased dramatically True False 28. Among developing nations, the largest recipient of foreign direct investment has been China. True False 29. Although most international trade and investment is still conducted by large firms, many medium-size and small businesses are becoming increasingly involved in international trade and investment. True False 30. The rise of the Internet is increasing the barriers that small firms face in building international sales. True False 31. Many of the former Communist nations of Europe and Asia seem to share a commitment to democratic policies and free market economies. True False 32. In the past quarter century, the volume of cross-border trade and investment has been growing less rapidly than global output. True False 33. One concern frequently voiced by globalization opponents is that falling barriers to international trade destroy manufacturing jobs in wealthy advanced economies such as the United States and western Europe. True False 34. 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 35. One concern of globalization opponents is that it undermines the influence of supranational organizations and promotes the sovereignty of individual nation-states. True False 1-4© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use.