,Global Business Today, 11e (Hill)
Chapter 1 Globalization
1) As a result of globalization, we have been moving toward a world in which national
economies are relatively self-contained entities.
Answer: FALSE
Explanation: Over the past five decades, a fundamental shift has been occurring in the world
economy. We have been moving away from a world in which national economies were relatively
self-contained entities, isolated from each other by barriers to cross-border trade and investment;
by distance, time zones, and language; and by national differences in government regulation,
culture, and business systems.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) To truly benefit from globalization, a firm needs to be a multinational conglomerate rather
than a small or mid-size company.
Answer: FALSE
Explanation: A company does not have to be the size of a multinational giant to benefit from
globalization. Currently, small and medium-size companies account for 33 percent of the value
of U.S. exports of manufactured goods.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) In today's marketplace, outsourcing efforts are confined to manufacturing activities.
Answer: FALSE
Explanation: Early outsourcing efforts were primarily confined to manufacturing activities.
Increasingly, however, companies are taking advantage of modern communications technology,
particularly the Internet, to outsource service activities to low-cost producers in other nations.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) 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.
Answer: TRUE
Explanation: Over the past half century, a number of important global institutions have been
created to help manage, regulate, and police the global marketplace and to promote the
establishment of multinational treaties to govern the global business system. These include the
General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade
Organization (WTO); the International Monetary Fund (IMF) and its sister institution, the World
Bank; and the United Nations (UN). All these institutions were created by voluntary agreement
between individual nation-states, and their functions are enshrined in international treaties.
Difficulty: 1 Easy
Topic: Various Types of Institutions in Global Business
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The WTO polices the world trading system, and without this organization, the globalization of
markets might not be where it is today.
Answer: TRUE
Explanation: The WTO 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 WTO member
states. Without an institution such as the WTO, the globalization of markets and production is
unlikely to have proceeded as far as it has.
Difficulty: 1 Easy
Topic: Various Types of Institutions in Global Business
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) Foreign direct investment (FDI) occurs when a firm invests resources in business activities
outside its home country.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) The retaliatory trade policies of the 1920s and 1930s contributed to the Great Depression.
Answer: TRUE
Explanation: Many of the barriers to international trade in the 1920s and 1930s took the form of
high tariffs on imports of manufactured goods. The typical aim of such tariffs was to protect
domestic industries from foreign competition. One consequence, however, was "beggar thy
neighbor" retaliatory trade policies, with countries progressively raising trade barriers against
each other. Ultimately, this depressed world demand and contributed to the Great Depression of
the 1930s.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) The Uruguay Round extended GATT to cover services as well as manufactured goods.
Answer: TRUE
Explanation: The Uruguay Round further reduced trade barriers; extended GATT to cover
services as well as manufactured goods; provided enhanced protection for patents, trademarks,
and copyrights; and established the World Trade Organization to police the international trading
system.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
9) Enhanced protection for patents and trademarks was one focus of the Uruguay Round.
Answer: TRUE
Explanation: The Uruguay Round further reduced trade barriers; extended GATT to cover
services as well as manufactured goods; provided enhanced protection for patents, trademarks,
and copyrights; and established the World Trade Organization to police the international trading
system.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Chapter 1 Globalization
1) As a result of globalization, we have been moving toward a world in which national
economies are relatively self-contained entities.
Answer: FALSE
Explanation: Over the past five decades, a fundamental shift has been occurring in the world
economy. We have been moving away from a world in which national economies were relatively
self-contained entities, isolated from each other by barriers to cross-border trade and investment;
by distance, time zones, and language; and by national differences in government regulation,
culture, and business systems.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) To truly benefit from globalization, a firm needs to be a multinational conglomerate rather
than a small or mid-size company.
Answer: FALSE
Explanation: A company does not have to be the size of a multinational giant to benefit from
globalization. Currently, small and medium-size companies account for 33 percent of the value
of U.S. exports of manufactured goods.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3) In today's marketplace, outsourcing efforts are confined to manufacturing activities.
Answer: FALSE
Explanation: Early outsourcing efforts were primarily confined to manufacturing activities.
Increasingly, however, companies are taking advantage of modern communications technology,
particularly the Internet, to outsource service activities to low-cost producers in other nations.
Difficulty: 1 Easy
Topic: What is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) 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.
Answer: TRUE
Explanation: Over the past half century, a number of important global institutions have been
created to help manage, regulate, and police the global marketplace and to promote the
establishment of multinational treaties to govern the global business system. These include the
General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade
Organization (WTO); the International Monetary Fund (IMF) and its sister institution, the World
Bank; and the United Nations (UN). All these institutions were created by voluntary agreement
between individual nation-states, and their functions are enshrined in international treaties.
Difficulty: 1 Easy
Topic: Various Types of Institutions in Global Business
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The WTO polices the world trading system, and without this organization, the globalization of
markets might not be where it is today.
Answer: TRUE
Explanation: The WTO 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 WTO member
states. Without an institution such as the WTO, the globalization of markets and production is
unlikely to have proceeded as far as it has.
Difficulty: 1 Easy
Topic: Various Types of Institutions in Global Business
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) Foreign direct investment (FDI) occurs when a firm invests resources in business activities
outside its home country.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, 7) The retaliatory trade policies of the 1920s and 1930s contributed to the Great Depression.
Answer: TRUE
Explanation: Many of the barriers to international trade in the 1920s and 1930s took the form of
high tariffs on imports of manufactured goods. The typical aim of such tariffs was to protect
domestic industries from foreign competition. One consequence, however, was "beggar thy
neighbor" retaliatory trade policies, with countries progressively raising trade barriers against
each other. Ultimately, this depressed world demand and contributed to the Great Depression of
the 1930s.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
8) The Uruguay Round extended GATT to cover services as well as manufactured goods.
Answer: TRUE
Explanation: The Uruguay Round further reduced trade barriers; extended GATT to cover
services as well as manufactured goods; provided enhanced protection for patents, trademarks,
and copyrights; and established the World Trade Organization to police the international trading
system.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
9) Enhanced protection for patents and trademarks was one focus of the Uruguay Round.
Answer: TRUE
Explanation: The Uruguay Round further reduced trade barriers; extended GATT to cover
services as well as manufactured goods; provided enhanced protection for patents, trademarks,
and copyrights; and established the World Trade Organization to police the international trading
system.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
3
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
