INTERNATIONAL BUSINESS:
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD VERSION 4.2
TEST BANK QUESTIONS AND
ANSWERS. VERIFIED 2026/2027
1. According to Thomas Friedman, which era of globalization was characterized by the
‘shrinking’ of the world from size small to size tiny, driven by individuals rather than countries
or companies?
A. Globalization 3.0
B. Globalization 2.0
C. Globalization 1.0
D. Globalization 4.0
Answer: A
Conceptual Explanation: Globalization 3.0 (2000-present) is defined by the
empowerment of individuals to collaborate and compete globally, enabled by the internet
and software.
2. Which of the following describes the ‘Triple Convergence’ identified by Friedman as a
primary force for a flatter world?
A. Market, Legal, and Political systems merging
,B. Trade, Finance, and Migration converging
C. The alliance of the EU, NAFTA, and ASEAN
D. New players, new playing fields, and new processes meeting
Answer: D
Conceptual Explanation: The Triple Convergence refers to the meeting of a new playing
field (web/software), new ways of collaborating (processes), and new players (billions of
individuals from China, India, etc.).
3. Under the Heckscher-Ohlin theory of international trade, which factor is most critical in
determining a country’s comparative advantage?
A. Labor productivity differences
B. Factor endowments such as land, labor, and capital
C. Strategic government subsidies
D. First-mover advantage in a niche market
Answer: B
Conceptual Explanation: Heckscher-Ohlin suggests that countries export goods that make
intensive use of factors that are locally abundant.
4. What is the primary function of the World Bank’s International Development Association
(IDA)?
A. Providing commercial loans to developed nations
, B. Settling trade disputes between member nations
C. Regulating global currency exchange rates
D. Offering interest-free loans and grants to the poorest countries
Answer: D
Conceptual Explanation: The IDA is the part of the World Bank that helps the world’s
poorest countries by providing grants and low-to-zero interest loans.
5. In the CAGE framework proposed by Pankaj Ghemawat, the ‘A’ stands for which type of
distance?
A. Aesthetic distance
B. Allocative distance
C. Administrative distance
D. Associative distance
Answer: C
Conceptual Explanation: CAGE stands for Cultural, Administrative, Geographic, and
Economic distances between countries.
6. Which legal system is characterized by a reliance on detailed legal codes and statutes
rather than judicial precedence?
A. Common Law
B. Theocratic Law
OPPORTUNITIES AND CHALLENGES IN
A FLATTENING WORLD VERSION 4.2
TEST BANK QUESTIONS AND
ANSWERS. VERIFIED 2026/2027
1. According to Thomas Friedman, which era of globalization was characterized by the
‘shrinking’ of the world from size small to size tiny, driven by individuals rather than countries
or companies?
A. Globalization 3.0
B. Globalization 2.0
C. Globalization 1.0
D. Globalization 4.0
Answer: A
Conceptual Explanation: Globalization 3.0 (2000-present) is defined by the
empowerment of individuals to collaborate and compete globally, enabled by the internet
and software.
2. Which of the following describes the ‘Triple Convergence’ identified by Friedman as a
primary force for a flatter world?
A. Market, Legal, and Political systems merging
,B. Trade, Finance, and Migration converging
C. The alliance of the EU, NAFTA, and ASEAN
D. New players, new playing fields, and new processes meeting
Answer: D
Conceptual Explanation: The Triple Convergence refers to the meeting of a new playing
field (web/software), new ways of collaborating (processes), and new players (billions of
individuals from China, India, etc.).
3. Under the Heckscher-Ohlin theory of international trade, which factor is most critical in
determining a country’s comparative advantage?
A. Labor productivity differences
B. Factor endowments such as land, labor, and capital
C. Strategic government subsidies
D. First-mover advantage in a niche market
Answer: B
Conceptual Explanation: Heckscher-Ohlin suggests that countries export goods that make
intensive use of factors that are locally abundant.
4. What is the primary function of the World Bank’s International Development Association
(IDA)?
A. Providing commercial loans to developed nations
, B. Settling trade disputes between member nations
C. Regulating global currency exchange rates
D. Offering interest-free loans and grants to the poorest countries
Answer: D
Conceptual Explanation: The IDA is the part of the World Bank that helps the world’s
poorest countries by providing grants and low-to-zero interest loans.
5. In the CAGE framework proposed by Pankaj Ghemawat, the ‘A’ stands for which type of
distance?
A. Aesthetic distance
B. Allocative distance
C. Administrative distance
D. Associative distance
Answer: C
Conceptual Explanation: CAGE stands for Cultural, Administrative, Geographic, and
Economic distances between countries.
6. Which legal system is characterized by a reliance on detailed legal codes and statutes
rather than judicial precedence?
A. Common Law
B. Theocratic Law
