International Business

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Chapter 01
Globalization

True / False Questions

1. (p. 4) The notion that national economies are relatively self-contained entities is on the rise. FALSE
2. (p. 4) For the last 50 years, the volume of goods, services and investment crossing national borders has consistently expanded faster than world output. TRUE
3. (p. 4) Today, the world economy is fast moving toward a world in which barriers to cross-border trade and investment are declining. TRUE
4. (p. 6) The shift toward a more integrated and interdependent world economy is referred to as globalization. TRUE
5. (p. 6) The merging of historically distinct and separate markets into one huge global marketplace is known as the globalization of markets. TRUE
6. (p. 6) The majority of U.S. firms that export are large multinationals that employ 500 or more people. FALSE
7. (p. 6) The most global markets currently are markets for industrial goods and materials that serve a universal need the world over. TRUE
8. (p. 7) Outsourcing is a process that is limited to manufacturing enterprises. FALSE
9. (p. 9) Because of their nature, service activities cannot be outsourced to other companies. FALSE
10. (p. 10) The World Bank is responsible for maintaining order in the American monetary system. FALSE
11. (p. 11) One of the UN central mandates is the promotion of higher standards of living, full employment and conditions of economic and social progress and development. TRUE
12. (p. 11) Underlying the trend towards greater globalization is technological change and a decline in barriers to the free flow of goods, services and capital. TRUE
13. (p. 12) According to the United Nations most changes between 1992 and 2005 to laws governing FDI have resulted in a less favorable environment for FDI. FALSE
14. (p. 12) According to WTO data, the volume of world merchandise trade has grown faster than the world economy since 1950. TRUE
15. (p. 12) The expansion of world trade implies that nations are becoming less dependent on each other for important goods and services. FALSE
16. (p. 14) Moore's Law predicts that the power of microprocessor technology doubles and its cost of production falls by half every 18 months. TRUE
17. (p. 14) Efficiency gains associated with containerization have caused transportation costs to fall dramatically. TRUE
18. (p. 16) The advent of commercial jet travel, by reducing the time needed to get from one location to another, has effectively shrunk the globe. TRUE
19. (p. 16) Today global communication networks and global media are creating a worldwide culture. TRUE
20. (p. 16) In the early 1960s, the United States was by far the world's dominant industrial power. However by 2006, it lost its dominant position and now is no longer the world's largest industrial power. FALSE

21. (p. 18) By 2004, the U.S. had seen its share of exports fall to almost half its share in the 1960s. TRUE
22. (p. 17) According to forecasts, a further relative decline in the share of world output and world exports accounted for by the United States and other long-established developed nations is unlikely. FALSE

23. (p. 21) A current trend in international business is the growth of medium-sized and small multinationals, known as mini-multinationals. TRUE
24. (p. 22) Today, the risks involved in doing business in countries such as Russia are low, but so are the returns. FALSE
25. (p. 23) If the free market reforms in China continue for two more decades, China may move from Third World status to industrial superpower status even more rapidly than Japan did. TRUE
26. (p. 23) Current trends indicate that the world is moving rapidly towards an economic system that is more favorable for international business. TRUE
27. (p. 24) Many economists, politicians and business leaders believe that the shift toward a more integrated and interdependent global economy is a positive trend. TRUE
28. (p. 25) The antiglobalization effort is created and...
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