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89 Cards in this Set
- Front
- Back
The two main components of globalization are: |
the globalization of markets and the globalization of production |
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_____ are the two macro factors that seem to underlie the trend toward greater globalization. |
The decline in barriers to the free flow of goods, services, and capital that has occurred since the end of world war II and technological change. |
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The _____ is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by member states. |
World Trade Organization. |
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The Core Region is characterized by all of the following except: |
Has high levels of productivity and diversified economies Has the highest standing of living Dominates world trade Controls only some technologies *** |
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What were the effects of the Silk Road the people of the Eastern Hemisphere? |
Cultural diffusion and expanded global trade |
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YaYa Systems can be described as engaging in: |
International trade. |
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The growing integration of the world economy into a single, huge marketplace is: |
Increasing the intensity of competition in a range of manufacturing and service industries. |
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Although Gillette is an American company, it has invested substantial business resources in activities outside the United States. This practice is referred to as: |
Foreign direct investment |
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Due to containerization, the transportation costs associated with the globalization of production have: |
Declined |
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In a pure _____ economy the goods and services that a country produces, and the quantity in which they are produced, is not planned by anyone. Rather it is determined by the interaction of supply and demand and signaled to producers through the price system. |
Market |
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Evidence suggests that FDI is playing a(n): |
Increasing role in the world economy |
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How has technological innovation affected the globalization of production? |
It makes it possible for a firm to create and manage a globally dispersed production system. |
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The _____ is influenced by the prevailing political system. |
Economic system |
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Arguably, the single most important innovation has been the development of the _____. |
Microprocessor |
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As the Onion video humorously showed, families can save money on daycare by _____. |
Outsourcing. |
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Many states in Asia, Latin America, and Western Europe have shifted toward a more market-based economy. Which of the following measures is most likely to be promoted by such states? |
Deregulation of the economy |
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The income distribution in the United States (and many OECD countries) has _____ in the last 20 years. |
Become more unequal |
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The HDI is based on all of the following measures except: |
Political freedom |
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Which of the following statements about the legal system of countries is NOT true? |
1. They can affect the attractiveness of a country as an investment site or market. 2. They are influenced by the prevailing political system of the country. 3. They are almost the same for all countries. *** 4. They are of are of immense importance to international business. |
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Political systems can be assessed according to two related dimensions: |
The degree to which they emphasize collectivism opposed to individualism and the degree to which they are democratic or totalitarian. |
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Privatization refers to: |
The selling of state-owned enterprises to private investors. |
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All of the following are examples of counterfeited products mentioned in class EXCEPT: |
1. Eggs
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Since the late 1980s two major trends have emerged in the political economies of many of the world’s national states. These are: |
A wave of democratic revolutions have swept the world and there has been a strong move away from centrally planned and mixed economies towards more free market economies. |
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As seen in the Oreo commercials, globalization results in a greater degree of _____ across markets than would be present otherwise. |
homogeneity |
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Which of the following is NOT true regarding culture? |
1. Culture is static. ***
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The high level of entrepreneurial activity in the United States can be attributed in part to the high level of emphasis place on the _____ in the American society. |
Individual. |
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Cultural imperialism occurs when |
The values of developed countries are imposed upon developing nations. |
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Which of the following refers to the extent to which individuals can move out of the strata into which they are born? |
Social Mobility |
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Creative destruction is the term used to describe: |
The process of new products and technologies making older goods and skills obsolete and less useful |
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Propagated in the 16th and 17th centuries, _____ advocated that countries should simultaneously encourage exports and discourage imports. |
Mercantilism |
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David Ricardo’s theory of comparative advantage attempts to rationalize why some countries export automobiles, consumer electronics, and machine tools, while other countries export chemicals, watches, and jewelry. This rationalization is best explained in terms of: |
International differences in labor productivity. |
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The United States has an abundance of arable land, but faces a shortage of low-cost labor. In contrast, China excels in the production of labor-intensive goods, such as footwear and textiles. According to the Heckscher-Ohlin theory: |
United States will import textiles and footwear from China and export agricultural goods. |
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According to Smith, countries should specialize in the production of goods for which they have an absolute advantage and then: |
Trade these goods for the goods produced by other countries. |
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While most trade makes sense, the video in which _____ shows that some trade is difficult to explain. |
The American company exporting chopsticks to China |
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What was Samuelson’s criticism of free trade? |
A rich country importing cheap goods from a poor country may not make up for the wage losses in the rich country |
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_____ tend(s) to be one of the largest beneficiaries of subsidies in most countries. |
Agriculture |
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Both import quotas and VERs benefit _____ by limiting import competition, but they result in higher prices, which hurt _____. |
Domestic producers, consumers |
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At one time, the French government required that all imported videotape recorders arrive in France through a small customs entry point that was both remote and poorly staffed. This is an example of a(n): |
Administrative trade party |
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Which of the following is variously defined as selling goods in a foreign marker at below their costs of production or as selling goods in a foreign market at below theri “fair” market value? |
Dumping |
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If LiLee Inc. decided to produce machine tools in Spain, and the Spanish government stipulated that 50% of the component parts that went into LiLee’s machine tools must be produced locally, that requirement would be an example of a(n) _____ |
Local content requirement. |
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Porter’s suggested four attributes making up the “diamond” consist of factor endowments. relating and supporting industries, firm strategy and structure, and: |
Demand conditions. |
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One of the most famous examples of a(n) _____ is the limitation on auto exports to the United States enforced by Japanese automobile producers in 1981. |
Voluntary export restraint |
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FDI occurs when a: |
Firm invests directly in facilities to produce or market a product in a foreign country. |
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A greenfield investment: |
Is a form of FDI that involves the establishment of a new operation in a foreign country. |
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FDI has been rising for all of the following reasons except: |
1. The general increase in trade barriers over the past 30 years ***
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Historically, most FDI has been directed at the _____ nations of the world as firms based in advanced countries invested in _____ |
Developed; each other’s markets |
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The U.S. has been an attractive target for FDI because of all the following reasons except: |
1. It’s dynamic and stable economy
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Today, most cross-border investment is: |
Made via mergers and acquisitions |
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According to the free market view, how does FDI by a multinational company increase the efficiency of world economy? |
The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe |
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A distinctive aspect of _____ is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants. |
Pragmatic nationalism |
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Once a firm undertakes FDI, it becomes a(n) _____ |
multinational enterprise |
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Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets. |
Internalization theory |
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Which of the following are three of the main benefits of inward FDI for a host country? |
The resource-transfer effect, the employment effect, and the balance-of-payments effect. |
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All of the following European countries are facing a debt crisis except |
1. Ireland
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These are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements |
Free trade areas |
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Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated? |
Free trade area, customs union, common market, economic union, and full political union. |
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Which of the following is seen as a disadvantage of the euro? |
National authorities losing control over monetary policy |
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In the Ezra Klein video, he explains why we should care about the ____ bond yields. |
Spanish |
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While most FDI makes sense, The Daily Show video we saw in class, showed |
Taco Bell entering the Mexican market |
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The functions of money include all of the following except: |
A tool for barter |
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All of the following are examples of commodity money mentioned in class EXCEPT: |
1. Butter
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Money that is backed by the government’s word is called |
Fiat money |
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For an asset to act as money, the asset must |
Be commonly accepted by the public as a medium of exchange |
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The exchange of commodities for commodities is called |
Barter |
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As discussed in the presentation, Bitcoin is an example of _____ |
Virtual money |
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The foreign exchange market serves two main functions. These are: |
Convert the currency of one country into a currency of another and provide some insurance against foreign exchange risk. |
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An exchange rate of E1 = $1.30 indicates that: |
One euro buys $1.30 |
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As we saw in the video where the trader made $32,000 in less than three minutes _____ typically involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates. |
Currency speculation |
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When a U.S. tourist in China goes to a bank to convert her dollars into Chinese yuan, the exchange rate is the |
Spot exchange rate |
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At the most basic level, exchange rates are determined by: |
The demand and supply of one currency relative to the demand and supply of another |
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Which of the following is a feature of the foreign exchange market? |
The market never sleeps |
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Most economic theories of exchange rate movements agree that three factors have an important impact on future exchange rate movements in a country’s currency. Which of the following is NOT one of these factors? |
1. The country’s population
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Which of the following is illustrated by the Big Mac Index published by The Economist? |
The purchasing power parity theory |
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A _____ exchange occurs when two parties agree to exchange currency and execute the deal at some specific date in the future |
Forward |
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According to the _____, identical products sold in different countries must sell for the same price when their price is expressed in the same currency in competitive markets free of transportation costs and barriers to trade |
Law of one price |
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When the foreign exchange market determines the relative value of a currency, we say that the currency is adhering to a: |
Floating exchange rate |
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Which of the following statements is true of the Gold standard? |
Currencies were pegged to gold under the gold standard |
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The task of the International Monetary Fund, as established by the Bretton Woods agreement, is to: |
Maintain order in the international monetary system |
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Which of the following is a function of World Bank? |
Lending money to governments for development |
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Fixed exchange rates are seen as a mechanism for achieving the following two objectives |
Controlling inflation and economic discipline |
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As seen in It’s a Wonderful Life, a _____ refers to a situation in which a loss of confidence in the banking system leads to a run on banks, as individuals and companies withdraw their deposits |
Banking crisis |
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A country’s currency is said to be _____ when the country’s government allows both residents and nonresidents to purchase unlimited amounts of foreign currency with it |
Freely convertible |
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The international capital market boom in the 1980’s, 1990’s, and 2000’s can be attributed to the |
Advances in information technology |
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Analysts who believe that the globalization of capital has serious inherent risks argue that: |
Due to deregulation and reduced controls on cross-border capital flows, individual nations are becoming more vulnerable to speculative capital |
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A Eurocurrency is a currency _____ |
Banked outside of its country of orgin |
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Market makers are: |
Financial service companies that connect investors and borrowers |
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Kiva.org is an example of _____ |
Micro-financing |
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Offshoring is |
Substituting foreign for domestic labor |
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In the video about Wal-Mart, it stated that the United States exports _____ to China and imports _____ from China |
Recyclable materials, finished goods |