Global Economy

Front 1

The two main components of globalization are:

Back 1

the globalization of markets and the globalization of production

Front 2

_____ are the two macro factors that seem to underlie the trend toward greater globalization.

Back 2

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.

Front 3

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.

Back 3

World Trade Organization.

Front 4

The Core Region is characterized by all of the following except:

Back 4

Has high levels of productivity and diversified economies

Has the highest standing of living

Dominates world trade

Controls only some technologies ***

Front 5

What were the effects of the Silk Road the people of the Eastern Hemisphere?

Back 5

Cultural diffusion and expanded global trade

Front 6

YaYa Systems can be described as engaging in:

Back 6

International trade.

Front 7

The growing integration of the world economy into a single, huge marketplace is:

Back 7

Increasing the intensity of competition in a range of manufacturing and service industries.

Front 8

Although Gillette is an American company, it has invested substantial business resources in activities outside the United States. This practice is referred to as:

Back 8

Foreign direct investment

Front 9

Due to containerization, the transportation costs associated with the globalization of production have:

Back 9

Declined

Front 10

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.

Back 10

Market

Front 11

Evidence suggests that FDI is playing a(n):

Back 11

Increasing role in the world economy

Front 12

How has technological innovation affected the globalization of production?

Back 12

It makes it possible for a firm to create and manage a globally dispersed production system.

Front 13

The _____ is influenced by the prevailing political system.

Back 13

Economic system

Front 14

Arguably, the single most important innovation has been the development of the _____.

Back 14

Microprocessor

Front 15

As the Onion video humorously showed, families can save money on daycare by _____.

Back 15

Outsourcing.

Front 16

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?

Back 16

Deregulation of the economy

Front 17

The income distribution in the United States (and many OECD countries) has _____ in the last 20 years.

Back 17

Become more unequal

Front 18

The HDI is based on all of the following measures except:

Back 18

Political freedom

Front 19

Which of the following statements about the legal system of countries is NOT true?

Back 19

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.

Front 20

Political systems can be assessed according to two related dimensions:

Back 20

The degree to which they emphasize collectivism opposed to individualism and the degree to which they are democratic or totalitarian.

Front 21

Privatization refers to:

Back 21

The selling of state-owned enterprises to private investors.

Front 22

All of the following are examples of counterfeited products mentioned in class EXCEPT:

Back 22

1. Eggs

Front 23

Since the late 1980s two major trends have emerged in the political economies of many of the world’s national states. These are:

Back 23

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.

Front 24

As seen in the Oreo commercials, globalization results in a greater degree of _____ across markets than would be present otherwise.

Back 24

homogeneity

Front 25

Which of the following is NOT true regarding culture?

Back 25

1. Culture is static. ***

Front 26

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.

Back 26

Individual.

Front 27

Cultural imperialism occurs when

Back 27

The values of developed countries are imposed upon developing nations.

Front 28

Which of the following refers to the extent to which individuals can move out of the strata into which they are born?

Back 28

Social Mobility

Front 29

Creative destruction is the term used to describe:

Back 29

The process of new products and technologies making older goods and skills obsolete and less useful

Front 30

Propagated in the 16th and 17th centuries, _____ advocated that countries should simultaneously encourage exports and discourage imports.

Back 30

Mercantilism

Front 31

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:

Back 31

International differences in labor productivity.

Front 32

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:

Back 32

United States will import textiles and footwear from China and export agricultural goods.

Front 33

According to Smith, countries should specialize in the production of goods for which they have an absolute advantage and then:

Back 33

Trade these goods for the goods produced by other countries.

Front 34

While most trade makes sense, the video in which _____ shows that some trade is difficult to explain.

Back 34

The American company exporting chopsticks to China

Front 35

What was Samuelson’s criticism of free trade?

Back 35

A rich country importing cheap goods from a poor country may not make up for the wage losses in the rich country

Front 36

_____ tend(s) to be one of the largest beneficiaries of subsidies in most countries.

Back 36

Agriculture

Front 37

Both import quotas and VERs benefit _____ by limiting import competition, but they result in higher prices, which hurt _____.

Back 37

Domestic producers, consumers

Front 38

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):

Back 38

Administrative trade party

Front 39

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?

Back 39

Dumping

Front 40

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) _____

Back 40

Local content requirement.

Front 41

Porter’s suggested four attributes making up the “diamond” consist of factor endowments. relating and supporting industries, firm strategy and structure, and:

Back 41

Demand conditions.

Front 42

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.

Back 42

Voluntary export restraint

Front 43

FDI occurs when a:

Back 43

Firm invests directly in facilities to produce or market a product in a foreign country.

Front 44

A greenfield investment:

Back 44

Is a form of FDI that involves the establishment of a new operation in a foreign country.

Front 45

FDI has been rising for all of the following reasons except:

Back 45

1. The general increase in trade barriers over the past 30 years ***

Front 46

Historically, most FDI has been directed at the _____ nations of the world as firms based in advanced countries invested in _____

Back 46

Developed; each other’s markets

Front 47

The U.S. has been an attractive target for FDI because of all the following reasons except:

Back 47

1. It’s dynamic and stable economy

Front 48

Today, most cross-border investment is:

Back 48

Made via mergers and acquisitions

Front 49

According to the free market view, how does FDI by a multinational company increase the efficiency of world economy?

Back 49

The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe

Front 50

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.

Back 50

Pragmatic nationalism

Front 51

Once a firm undertakes FDI, it becomes a(n) _____

Back 51

multinational enterprise

Front 52

Identify the theory that seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets.

Back 52

Internalization theory

Front 53

Which of the following are three of the main benefits of inward FDI for a host country?

Back 53

The resource-transfer effect, the employment effect, and the balance-of-payments effect.

Front 54

All of the following European countries are facing a debt crisis except

Back 54

1. Ireland

Front 55

These are the most popular form of regional economic integration, accounting for almost 90 percent of regional agreements

Back 55

Free trade areas

Front 56

Which of the following selections accurately depicts the levels of economic integration from least integrated to most integrated?

Back 56

Free trade area, customs union, common market, economic union, and full political union.

Front 57

Which of the following is seen as a disadvantage of the euro?

Back 57

National authorities losing control over monetary policy

Front 58

In the Ezra Klein video, he explains why we should care about the ____ bond yields.

Back 58

Spanish

Front 59

While most FDI makes sense, The Daily Show video we saw in class, showed

Back 59

Taco Bell entering the Mexican market

Front 60

The functions of money include all of the following except:

Back 60

A tool for barter

Front 61

All of the following are examples of commodity money mentioned in class EXCEPT:

Back 61

1. Butter

Front 62

Money that is backed by the government’s word is called

Back 62

Fiat money

Front 63

For an asset to act as money, the asset must

Back 63

Be commonly accepted by the public as a medium of exchange

Front 64

The exchange of commodities for commodities is called

Back 64

Barter

Front 65

As discussed in the presentation, Bitcoin is an example of _____

Back 65

Virtual money

Front 66

The foreign exchange market serves two main functions. These are:

Back 66

Convert the currency of one country into a currency of another and provide some insurance against foreign exchange risk.

Front 67

An exchange rate of E1 = $1.30 indicates that:

Back 67

One euro buys $1.30

Front 68

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.

Back 68

Currency speculation

Front 69

When a U.S. tourist in China goes to a bank to convert her dollars into Chinese yuan, the exchange rate is the

Back 69

Spot exchange rate

Front 70

At the most basic level, exchange rates are determined by:

Back 70

The demand and supply of one currency relative to the demand and supply of another

Front 71

Which of the following is a feature of the foreign exchange market?

Back 71

The market never sleeps

Front 72

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?

Back 72

1. The country’s population

Front 73

Which of the following is illustrated by the Big Mac Index published by The Economist?

Back 73

The purchasing power parity theory

Front 74

A _____ exchange occurs when two parties agree to exchange currency and execute the deal at some specific date in the future

Back 74

Forward

Front 75

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

Back 75

Law of one price

Front 76

When the foreign exchange market determines the relative value of a currency, we say that the currency is adhering to a:

Back 76

Floating exchange rate

Front 77

Which of the following statements is true of the Gold standard?

Back 77

Currencies were pegged to gold under the gold standard

Front 78

The task of the International Monetary Fund, as established by the Bretton Woods agreement, is to:

Back 78

Maintain order in the international monetary system

Front 79

Which of the following is a function of World Bank?

Back 79

Lending money to governments for development

Front 80

Fixed exchange rates are seen as a mechanism for achieving the following two objectives

Back 80

Controlling inflation and economic discipline

Front 81

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

Back 81

Banking crisis

Front 82

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

Back 82

Freely convertible

Front 83

The international capital market boom in the 1980’s, 1990’s, and 2000’s can be attributed to the

Back 83

Advances in information technology

Front 84

Analysts who believe that the globalization of capital has serious inherent risks argue that:

Back 84

Due to deregulation and reduced controls on cross-border capital flows, individual nations are becoming more vulnerable to speculative capital

Front 85

A Eurocurrency is a currency _____

Back 85

Banked outside of its country of orgin

Front 86

Market makers are:

Back 86

Financial service companies that connect investors and borrowers

Front 87

Kiva.org is an example of _____

Back 87

Micro-financing

Front 88

Offshoring is

Back 88

Substituting foreign for domestic labor

Front 89

In the video about Wal-Mart, it stated that the United States exports _____ to China and imports _____ from China

Back 89

Recyclable materials, finished goods