BUSMHR 2000 MIDTERM EXAMS 2025/2026 QUESTIONS
WITH SOLUTIONS RATED A+
✔✔The Uruguay Round - ✔✔-December 1993
-Extended GATT to cover services as well as manufactured goods.
-Provided enhanced protection for patents, trademarks, and copyrights.
-Established the World Trade Organization to police the international trading system.
✔✔GATT effect on average tariff rates - ✔✔Average tariffs rates haven fallen
significantly since 1950, now standing above 4%.
✔✔The Doha agenda - ✔✔-Cutting tariffs on industrial goods, services, and agricultural
products.
-Phasing out subsidies to agricultural producers.
-Reducing barriers to cross-border investments.
-Limiting the use of antidumping laws.
✔✔Lowering barriers to international trade - ✔✔-Enables firms to view the world as their
market.
-Allows firms to base production at the optimal location for that activity.
✔✔World trade growth - ✔✔-Volume of world trade in merchandised goods has grown
TWICE the rate of the world economy since 1950.
-By 2012, world trade was 32 times LARGER than in 1950; but world economy was 8.9
times larger. (bad)
-Volume of world trade was THREE times larger in 2012 than in 1990; world economy
was 1.62 times larger.
✔✔Why world trade is growing faster than world GDP - ✔✔-Firms are dispersing parts
of their production process to different locations around the globe (decreases production
costs, increases product quality).
-Economies of the world's nation-states are becoming more intertwined as trade
expands.
-The world has become significantly wealthier since 1990 (due to rising trade).
✔✔Effect of the growth of the integration of the world economy into a single
marketplace - ✔✔Increases in competition in a range of manufacturing and service
industries.
✔✔Microprocessor - ✔✔-Single most important innovation that enabled the growth of
high-power, low-cost computing.
-Vastly increased the amount of information that can be processed by individuals and
firms.
-Led to the development of satellite, optical fiber, wireless technologies, and Internet.
,✔✔Moore's Law - ✔✔-Phenomenon that predicts that the power of microprocessor
technology doubles and its cost of production falls in half every 18 months.
✔✔The Internet - ✔✔-1994: first web browser introduced.
-Developed into the information backbone of the global economy.
-Rolls back constraints of location, scale, and time zones.
✔✔Transportation Technology - ✔✔In economic terms: most important are the
development of commercial jet aircraft and super-freighters, and introduction of
containerization.
✔✔Containerization - ✔✔-Simplifies transshipment from one mode of transport to
another. (started 1970s/1980s)
-Significantly lowers the cost of shipping goods over long distances.
-Transportation costs have plummeted.
✔✔Implications for the Globalization of Production - ✔✔-Transportation costs
associated with globalization of production have declined. -Dispersal of production to
geographically separate locations have become more economical.
-Real costs of information processing and communication also decreased.
✔✔Implications for the Globalization of Markets - ✔✔-Low cost global communication
networks helped to create electronic global marketplaces.
-Reduced cultural distance between countries and convergence of consumer
tastes/preferences.
✔✔Four stylized facts that describe the demographics of the global economy - ✔✔1.
U.S. dominance in the world economy and world trade picture.
2. U.S. dominance in world foreign trade investment.
3. Dominance of large, multinational U.S. firms on the international business scene.
4. Roughly half the globe was off-limits to Western international businesses.
✔✔Changing world output and world trade picture - ✔✔-1960's the U.S. accounted for
38.3% of world output, 2012 accounted for 23.1% (still largest industrial power).
-Reflected the faster growing economic growth of other economies ie. Asia.
-1960's Chine accounted for 0% of world output, 2012 rose to 10.8%.
-2012 U.S. world exports slipped to 8.7%, behind China at 11.5%.
✔✔Changing foreign direct investment picture - ✔✔-Motivation for FDI by non-U.S.
firms was the desire to disperse production activities to optimal locations & build a direct
presence in major foreign markets.
-1970's Europe and Japan shift labor-intensive manufacturing operations to developing
nations.
-2012 more developing countries held FDI stock; this shows they are starting to invest
outside their borders.
, ✔✔Stock of foreign direct investment - ✔✔The total cumulative value of foreign
investments.
✔✔Trends of the change in FDI inflows - ✔✔-The sustained growth in cross-border
flows of FDI that occurred during the 1990s.
-Increasing importance of developing nations as the destination of FDI.
✔✔Multinational enterprise (MNE) - ✔✔Any business that has productive activities in
two or more countries.
✔✔Notable trends in demographics of multinational enterprises - ✔✔1. The rise of non-
U.S. multinationals.
2. The growth of mini-multinationals.
✔✔Non-U.S. Multinationals - ✔✔-1960's U.S. multinationals dominated global business
activity, accounting for 2/3s of FDI.
-2012 things shifted and developing countries dominated the national share of
multinationals.
-Globalization and growth of world economy resulted in a relative decline in U.S.
dominance in the global marketplace.
✔✔Rise of Mini-Multinationals - ✔✔-Medium/Small multinationals continue to grow due
to the rise of the Internet which lowers barriers faced by small firms in building
internationals sales.
✔✔Antiglobalization protests - ✔✔-December 1990: 40,000 protestes blocked streets of
Seattle to shut down a WTO meeting.
-Protested job loss in industries facing attack from foreign competition; downward
pressure on the wage rates of unskilled workers; environmental degradation; the
cultural imperialism of global media and multinational enterprises.
-France 1999: antiglobalization activists destroyed a McDonalds.
✔✔Manufacturing concern often voiced by globalization opponents - ✔✔-Falling
barriers to international trade destroy manufacturing jobs in wealthy advanced
economies.
-Concern is supported by D.L. Bartlett and J.B. Steele from Philadelphia Inquirer whom
gained popularity for their attacks on free trade.
✔✔Services concern often voiced by globalization opponents - ✔✔-Corporations are
exporting jobs to low-wage nations and contributing to higher unemployment and lower
living standards in their home nations.
WITH SOLUTIONS RATED A+
✔✔The Uruguay Round - ✔✔-December 1993
-Extended GATT to cover services as well as manufactured goods.
-Provided enhanced protection for patents, trademarks, and copyrights.
-Established the World Trade Organization to police the international trading system.
✔✔GATT effect on average tariff rates - ✔✔Average tariffs rates haven fallen
significantly since 1950, now standing above 4%.
✔✔The Doha agenda - ✔✔-Cutting tariffs on industrial goods, services, and agricultural
products.
-Phasing out subsidies to agricultural producers.
-Reducing barriers to cross-border investments.
-Limiting the use of antidumping laws.
✔✔Lowering barriers to international trade - ✔✔-Enables firms to view the world as their
market.
-Allows firms to base production at the optimal location for that activity.
✔✔World trade growth - ✔✔-Volume of world trade in merchandised goods has grown
TWICE the rate of the world economy since 1950.
-By 2012, world trade was 32 times LARGER than in 1950; but world economy was 8.9
times larger. (bad)
-Volume of world trade was THREE times larger in 2012 than in 1990; world economy
was 1.62 times larger.
✔✔Why world trade is growing faster than world GDP - ✔✔-Firms are dispersing parts
of their production process to different locations around the globe (decreases production
costs, increases product quality).
-Economies of the world's nation-states are becoming more intertwined as trade
expands.
-The world has become significantly wealthier since 1990 (due to rising trade).
✔✔Effect of the growth of the integration of the world economy into a single
marketplace - ✔✔Increases in competition in a range of manufacturing and service
industries.
✔✔Microprocessor - ✔✔-Single most important innovation that enabled the growth of
high-power, low-cost computing.
-Vastly increased the amount of information that can be processed by individuals and
firms.
-Led to the development of satellite, optical fiber, wireless technologies, and Internet.
,✔✔Moore's Law - ✔✔-Phenomenon that predicts that the power of microprocessor
technology doubles and its cost of production falls in half every 18 months.
✔✔The Internet - ✔✔-1994: first web browser introduced.
-Developed into the information backbone of the global economy.
-Rolls back constraints of location, scale, and time zones.
✔✔Transportation Technology - ✔✔In economic terms: most important are the
development of commercial jet aircraft and super-freighters, and introduction of
containerization.
✔✔Containerization - ✔✔-Simplifies transshipment from one mode of transport to
another. (started 1970s/1980s)
-Significantly lowers the cost of shipping goods over long distances.
-Transportation costs have plummeted.
✔✔Implications for the Globalization of Production - ✔✔-Transportation costs
associated with globalization of production have declined. -Dispersal of production to
geographically separate locations have become more economical.
-Real costs of information processing and communication also decreased.
✔✔Implications for the Globalization of Markets - ✔✔-Low cost global communication
networks helped to create electronic global marketplaces.
-Reduced cultural distance between countries and convergence of consumer
tastes/preferences.
✔✔Four stylized facts that describe the demographics of the global economy - ✔✔1.
U.S. dominance in the world economy and world trade picture.
2. U.S. dominance in world foreign trade investment.
3. Dominance of large, multinational U.S. firms on the international business scene.
4. Roughly half the globe was off-limits to Western international businesses.
✔✔Changing world output and world trade picture - ✔✔-1960's the U.S. accounted for
38.3% of world output, 2012 accounted for 23.1% (still largest industrial power).
-Reflected the faster growing economic growth of other economies ie. Asia.
-1960's Chine accounted for 0% of world output, 2012 rose to 10.8%.
-2012 U.S. world exports slipped to 8.7%, behind China at 11.5%.
✔✔Changing foreign direct investment picture - ✔✔-Motivation for FDI by non-U.S.
firms was the desire to disperse production activities to optimal locations & build a direct
presence in major foreign markets.
-1970's Europe and Japan shift labor-intensive manufacturing operations to developing
nations.
-2012 more developing countries held FDI stock; this shows they are starting to invest
outside their borders.
, ✔✔Stock of foreign direct investment - ✔✔The total cumulative value of foreign
investments.
✔✔Trends of the change in FDI inflows - ✔✔-The sustained growth in cross-border
flows of FDI that occurred during the 1990s.
-Increasing importance of developing nations as the destination of FDI.
✔✔Multinational enterprise (MNE) - ✔✔Any business that has productive activities in
two or more countries.
✔✔Notable trends in demographics of multinational enterprises - ✔✔1. The rise of non-
U.S. multinationals.
2. The growth of mini-multinationals.
✔✔Non-U.S. Multinationals - ✔✔-1960's U.S. multinationals dominated global business
activity, accounting for 2/3s of FDI.
-2012 things shifted and developing countries dominated the national share of
multinationals.
-Globalization and growth of world economy resulted in a relative decline in U.S.
dominance in the global marketplace.
✔✔Rise of Mini-Multinationals - ✔✔-Medium/Small multinationals continue to grow due
to the rise of the Internet which lowers barriers faced by small firms in building
internationals sales.
✔✔Antiglobalization protests - ✔✔-December 1990: 40,000 protestes blocked streets of
Seattle to shut down a WTO meeting.
-Protested job loss in industries facing attack from foreign competition; downward
pressure on the wage rates of unskilled workers; environmental degradation; the
cultural imperialism of global media and multinational enterprises.
-France 1999: antiglobalization activists destroyed a McDonalds.
✔✔Manufacturing concern often voiced by globalization opponents - ✔✔-Falling
barriers to international trade destroy manufacturing jobs in wealthy advanced
economies.
-Concern is supported by D.L. Bartlett and J.B. Steele from Philadelphia Inquirer whom
gained popularity for their attacks on free trade.
✔✔Services concern often voiced by globalization opponents - ✔✔-Corporations are
exporting jobs to low-wage nations and contributing to higher unemployment and lower
living standards in their home nations.
