Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019)
TEST BANK
International Business
Competing in the Global Marketplace
Charles Hill, G. Tomas M. Hult
12th Edition
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019)
Table of Contents
PART ONE: INTRODUCTION AND OVERVIEW
1. Globalization
PART TWO: NATIONAL DIFFERENCES
2. National Differences in Political, Economic, and Legal Systems
3. National Differences in Economic Development
4. Differences in Culture
5. Ethics, Corporate Social Responsibility, and Sustainability
PART THREE: THE GLOBAL TRADE AND INVESTMENT ENVIRONMENT
6. International Trade Theory
7. Government Policy and International Trade
8. Foreign Direct Investment
9. Regional Economic Integration
PART FOUR: THE GLOBAL MONETARY SYSTEM
10. The Foreign Exchange Market
11. The International Monetary System
12. The Global Capital Market
PART FIVE: THE STRATEGY AND STRUCTURE OF INTERNATIONAL BUSINESS
13. The Strategy of International Business
14. The Organization of International Business
15. Entering Developed and Emerging Markets
PART SIX: INTERNATIONAL BUSINESS FUNCTIONS
16. Exporting, Importing, and Countertrade
17. Global Production and Supply Chain Management
18. Global Marketing and Business Analytics
19. Global Human Resource Management
20. Accounting and Finance in International Business
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
Chapter 1 Globalization
1) Since Wally's Whistles is a medium-size business, it wouldn't benefit from globalization.
Answer: FALSE
Explanation: A company does not have to be the size of multinational giants to facilitate, and
benefit from, the globalization of markets. In the United States, for example, according to the
International Trade Administration, more than 300,000 small and medium-size firms with fewer
than 500 employees exported in 2017, accounting for 98 percent of the companies that exported
that year.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) Globalization of production can help companies lower their overall cost structure or improve
the quality or functionality of their product offering.
Answer: TRUE
Explanation: The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost and quality of
factors of production. By doing this, companies hope to lower their overall cost structure or
improve the quality or functionality of their product offering, thereby allowing them to compete
more effectively.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
3) Johann's business does not make consumer products; therefore, it would not be likely to
participate in global markets.
Answer: FALSE
Explanation: Most global markets currently are not markets for consumer products²where
national differences in tastes and preferences are still often important enough to act as a brake on
globalization²but markets for industrial goods and materials that serve a universal need the world
over.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) Outsourcing is a process that is limited to manufacturing enterprises.
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: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The World Bank has focused on policing the world trading system and making sure
nation-states adhere to the rules laid down in trade treaties.
Answer: FALSE
Explanation: The World Trade Organization 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. The World Bank was set up to promote economic development.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
6) When Cyprus had a financial crisis, it went to the World Bank, known as the lender of last
resort, to bail it out.
Answer: FALSE
Explanation: The IMF was established to maintain order in the international monetary system. It
is often 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.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) One of the UN's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development.
Answer: TRUE
Explanation: Although the UN is perhaps best known for its peacekeeping role, one of the
organization's central mandates is the promotion of higher standards of living, full employment,
and conditions of economic and social progress and development²all issues that are central to the
creation of a vibrant global economy.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The Uruguay Round, finalized in December 1993, reduced protection for patents, trademarks,
and copyrights.
Answer: FALSE
Explanation: Under the umbrella of GATT, the most recent negotiations to be completed, known
as the Uruguay Round, were finalized in December 1993. The Uruguay Round provided enhanced
protection for patents, trademarks, and copyrights.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
9) "Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade
barriers against each other, which contributed to the Great Depression of the 1930s.
Answer: FALSE
Explanation: The typical aim of tariffs on imports of manufactured goods 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: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
10) Rivers Inc., a U.S.-based sports apparel manufacturer, sets up a production unit in China to
take advantage of the lower labor costs there. This is an example of foreign direct investment.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) World Bank gives aid of $100 million to Kenya for creating rural health care facilities. This is
an example of foreign direct investment.
Answer: FALSE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
12) The lowering of barriers to international trade enables firms to view the world, rather than a
single country, as their market.
Answer: TRUE
Explanation: The lowering of barriers to international trade enables firms to view the world,
rather than a single country, as their market.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
13) According to WTO data, the volume of world merchandise trade has grown faster than the
world economy since 1950.
Answer: TRUE
Explanation: According to WTO data, the volume of world merchandise trade has grown faster
than the world economy since 1950.
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
14) The cost of microprocessors continues to fall, while their power increases. This statement
supports the predictions made by Moore's Law.
Answer: TRUE
Explanation: The cost of microprocessors continues to fall, while their power increases (a
phenomenon known as Moore's Law, which predicts that the power of microprocessor technology
doubles and its cost of production falls in half every 18 months).
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
15) Foreign direct investment by non-U.S. firms increased because they wanted to disperse
production activities to optimal locations and to build a direct presence in major foreign markets.
Answer: TRUE
Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other
countries increased their shares of world output, non-U.S. firms increasingly began to invest
across national borders. The motivation for much of this foreign direct investment by non-U.S.
firms was the desire to disperse production activities to optimal locations and to build a direct
presence in major foreign markets.
Difficulty: 2 Medium
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
16) A current trend in international business is the decline of medium-sized and small
multinationals, known as mini-multinationals.
Answer: FALSE
Explanation: Since the 1960s, two notable trends in the demographics of the multinational
enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of
mini-multinationals.
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
17) The globalization of the world economy has resulted in a relative increase in the dominance of
U.S. firms in the global marketplace.
Answer: FALSE
Explanation: By 2017, some 27 percent, or 540 firms, of the Top 2000 global firms are now U.S.
multinationals, a drop of 236 firms in only about a decade and a half. Japanese and U.K. firms also
saw declines in inclusion among the Top 2000 firms in the world. The globalization of the world
economy has resulted in a relative decline in the dominance of U.S. firms in the global marketplace
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
18) Because Russia has shown signs of shifting back toward greater state involvement in economic
activity and authoritarian government, doing business in Russia is considered risky.
Answer: TRUE
Explanation: Disturbing signs of growing unrest and totalitarian tendencies continue to be seen in
several Eastern European and Central Asian states, including Russia, which has shown signs of
shifting back toward greater state involvement in economic activity and authoritarian government.
Thus, the risks involved in doing business in such countries are high, but so may be the returns.
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
19) According to globalization critics, the decline in unskilled wage rates is due to the migration of
low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled
workers.
Answer: TRUE
Explanation: Globalization critics argue that the decline in unskilled wage rates is due to the
migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for
unskilled workers.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
20) Evidence suggests that technological change has had a bigger impact than globalization on the
declining share of national income enjoyed by unskilled labor.
Answer: TRUE
Explanation: Evidence suggests that technological change has had a bigger impact than
globalization on the declining share of national income enjoyed by unskilled labor.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
21) According to supporters of free trade, as countries get richer they commit greater violation of
environmental and labor regulations.
Answer: FALSE
Explanation: Supporters of free trade and greater globalization argue that tougher environmental
regulations and stricter labor standards go hand in hand with economic progress. In general, as
countries get richer, they enact tougher environmental and labor regulations.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
22) According to critics of globalization, today's interdependent global economy limits a nation's
national sovereignty.
Answer: TRUE
Explanation: A concern voiced by critics of globalization is that today's increasingly
interdependent global economy shifts economic power away from national governments and
toward supranational organizations such as the World Trade Organization, the European Union,
and the United Nations.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
23) According to supporters of debt relief, new democratic governments in poor nations should not
be forced to honor debts incurred by corrupt and dictatorial predecessors.
Answer: TRUE
Explanation: Supporters of debt relief argue that new democratic governments in poor nations
should not be forced to honor debts that were incurred and mismanaged long ago by their corrupt
and dictatorial predecessors.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8
TEST BANK
International Business
Competing in the Global Marketplace
Charles Hill, G. Tomas M. Hult
12th Edition
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019)
Table of Contents
PART ONE: INTRODUCTION AND OVERVIEW
1. Globalization
PART TWO: NATIONAL DIFFERENCES
2. National Differences in Political, Economic, and Legal Systems
3. National Differences in Economic Development
4. Differences in Culture
5. Ethics, Corporate Social Responsibility, and Sustainability
PART THREE: THE GLOBAL TRADE AND INVESTMENT ENVIRONMENT
6. International Trade Theory
7. Government Policy and International Trade
8. Foreign Direct Investment
9. Regional Economic Integration
PART FOUR: THE GLOBAL MONETARY SYSTEM
10. The Foreign Exchange Market
11. The International Monetary System
12. The Global Capital Market
PART FIVE: THE STRATEGY AND STRUCTURE OF INTERNATIONAL BUSINESS
13. The Strategy of International Business
14. The Organization of International Business
15. Entering Developed and Emerging Markets
PART SIX: INTERNATIONAL BUSINESS FUNCTIONS
16. Exporting, Importing, and Countertrade
17. Global Production and Supply Chain Management
18. Global Marketing and Business Analytics
19. Global Human Resource Management
20. Accounting and Finance in International Business
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
Chapter 1 Globalization
1) Since Wally's Whistles is a medium-size business, it wouldn't benefit from globalization.
Answer: FALSE
Explanation: A company does not have to be the size of multinational giants to facilitate, and
benefit from, the globalization of markets. In the United States, for example, according to the
International Trade Administration, more than 300,000 small and medium-size firms with fewer
than 500 employees exported in 2017, accounting for 98 percent of the companies that exported
that year.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) Globalization of production can help companies lower their overall cost structure or improve
the quality or functionality of their product offering.
Answer: TRUE
Explanation: The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost and quality of
factors of production. By doing this, companies hope to lower their overall cost structure or
improve the quality or functionality of their product offering, thereby allowing them to compete
more effectively.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
1
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
3) Johann's business does not make consumer products; therefore, it would not be likely to
participate in global markets.
Answer: FALSE
Explanation: Most global markets currently are not markets for consumer products²where
national differences in tastes and preferences are still often important enough to act as a brake on
globalization²but markets for industrial goods and materials that serve a universal need the world
over.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
4) Outsourcing is a process that is limited to manufacturing enterprises.
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: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5) The World Bank has focused on policing the world trading system and making sure
nation-states adhere to the rules laid down in trade treaties.
Answer: FALSE
Explanation: The World Trade Organization 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. The World Bank was set up to promote economic development.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
6) When Cyprus had a financial crisis, it went to the World Bank, known as the lender of last
resort, to bail it out.
Answer: FALSE
Explanation: The IMF was established to maintain order in the international monetary system. It
is often 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.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) One of the UN's central mandates is the promotion of higher standards of living, full
employment, and conditions of economic and social progress and development.
Answer: TRUE
Explanation: Although the UN is perhaps best known for its peacekeeping role, one of the
organization's central mandates is the promotion of higher standards of living, full employment,
and conditions of economic and social progress and development²all issues that are central to the
creation of a vibrant global economy.
Difficulty: 1 Easy
Topic: What Is Globalization?
Learning Objective: 01-01 Understand what is meant by the term globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The Uruguay Round, finalized in December 1993, reduced protection for patents, trademarks,
and copyrights.
Answer: FALSE
Explanation: Under the umbrella of GATT, the most recent negotiations to be completed, known
as the Uruguay Round, were finalized in December 1993. The Uruguay Round provided enhanced
protection for patents, trademarks, and copyrights.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
9) "Beggar thy neighbor" retaliatory trade policies involved countries progressively lowering trade
barriers against each other, which contributed to the Great Depression of the 1930s.
Answer: FALSE
Explanation: The typical aim of tariffs on imports of manufactured goods 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: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
10) Rivers Inc., a U.S.-based sports apparel manufacturer, sets up a production unit in China to
take advantage of the lower labor costs there. This is an example of foreign direct investment.
Answer: TRUE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) World Bank gives aid of $100 million to Kenya for creating rural health care facilities. This is
an example of foreign direct investment.
Answer: FALSE
Explanation: Foreign direct investment (FDI) occurs when a firm invests resources in business
activities outside its home country.
Difficulty: 2 Medium
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
12) The lowering of barriers to international trade enables firms to view the world, rather than a
single country, as their market.
Answer: TRUE
Explanation: The lowering of barriers to international trade enables firms to view the world,
rather than a single country, as their market.
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
13) According to WTO data, the volume of world merchandise trade has grown faster than the
world economy since 1950.
Answer: TRUE
Explanation: According to WTO data, the volume of world merchandise trade has grown faster
than the world economy since 1950.
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
14) The cost of microprocessors continues to fall, while their power increases. This statement
supports the predictions made by Moore's Law.
Answer: TRUE
Explanation: The cost of microprocessors continues to fall, while their power increases (a
phenomenon known as Moore's Law, which predicts that the power of microprocessor technology
doubles and its cost of production falls in half every 18 months).
Difficulty: 1 Easy
Topic: Drivers of Globalization
Learning Objective: 01-02 Recognize the main drivers of globalization.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
5
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
15) Foreign direct investment by non-U.S. firms increased because they wanted to disperse
production activities to optimal locations and to build a direct presence in major foreign markets.
Answer: TRUE
Explanation: As the barriers to the free flow of goods, services, and capital fell, and as other
countries increased their shares of world output, non-U.S. firms increasingly began to invest
across national borders. The motivation for much of this foreign direct investment by non-U.S.
firms was the desire to disperse production activities to optimal locations and to build a direct
presence in major foreign markets.
Difficulty: 2 Medium
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
16) A current trend in international business is the decline of medium-sized and small
multinationals, known as mini-multinationals.
Answer: FALSE
Explanation: Since the 1960s, two notable trends in the demographics of the multinational
enterprise have been (1) the rise of non-U.S. multinationals and (2) the growth of
mini-multinationals.
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
17) The globalization of the world economy has resulted in a relative increase in the dominance of
U.S. firms in the global marketplace.
Answer: FALSE
Explanation: By 2017, some 27 percent, or 540 firms, of the Top 2000 global firms are now U.S.
multinationals, a drop of 236 firms in only about a decade and a half. Japanese and U.K. firms also
saw declines in inclusion among the Top 2000 firms in the world. The globalization of the world
economy has resulted in a relative decline in the dominance of U.S. firms in the global marketplace
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
18) Because Russia has shown signs of shifting back toward greater state involvement in economic
activity and authoritarian government, doing business in Russia is considered risky.
Answer: TRUE
Explanation: Disturbing signs of growing unrest and totalitarian tendencies continue to be seen in
several Eastern European and Central Asian states, including Russia, which has shown signs of
shifting back toward greater state involvement in economic activity and authoritarian government.
Thus, the risks involved in doing business in such countries are high, but so may be the returns.
Difficulty: 1 Easy
Topic: The Changing Nature of the Global Economy
Learning Objective: 01-03 Describe the changing nature of the global economy.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
19) According to globalization critics, the decline in unskilled wage rates is due to the migration of
low-wage manufacturing jobs offshore and a corresponding reduction in demand for unskilled
workers.
Answer: TRUE
Explanation: Globalization critics argue that the decline in unskilled wage rates is due to the
migration of low-wage manufacturing jobs offshore and a corresponding reduction in demand for
unskilled workers.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
20) Evidence suggests that technological change has had a bigger impact than globalization on the
declining share of national income enjoyed by unskilled labor.
Answer: TRUE
Explanation: Evidence suggests that technological change has had a bigger impact than
globalization on the declining share of national income enjoyed by unskilled labor.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7
, Test Bank - International Business: Competing in the Global Marketplace 12th Edition (Hill, 2019
21) According to supporters of free trade, as countries get richer they commit greater violation of
environmental and labor regulations.
Answer: FALSE
Explanation: Supporters of free trade and greater globalization argue that tougher environmental
regulations and stricter labor standards go hand in hand with economic progress. In general, as
countries get richer, they enact tougher environmental and labor regulations.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
22) According to critics of globalization, today's interdependent global economy limits a nation's
national sovereignty.
Answer: TRUE
Explanation: A concern voiced by critics of globalization is that today's increasingly
interdependent global economy shifts economic power away from national governments and
toward supranational organizations such as the World Trade Organization, the European Union,
and the United Nations.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
23) According to supporters of debt relief, new democratic governments in poor nations should not
be forced to honor debts incurred by corrupt and dictatorial predecessors.
Answer: TRUE
Explanation: Supporters of debt relief argue that new democratic governments in poor nations
should not be forced to honor debts that were incurred and mismanaged long ago by their corrupt
and dictatorial predecessors.
Difficulty: 1 Easy
Topic: The Globalization Debate
Learning Objective: 01-04 Explain the main arguments in the debate over the impact of
globalization.
Bloom's: Remember
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