University of the Andes, Colombia

ECON MANAGERIAL

1)The trend toward a more integrated and interdependent global economic system that has been in place for many years is commonly referred to as:

2. Sourcing goods and services from locations around the globe is known as                  .

3. The globalization of                     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 (such as labour, energy, land, and capital).

1. information technology
2. process designC. Markets

D. production

E. R&D

4. The factors of production include:

1. information technology
2. process designC. Markets

D. labour

E. research and development.

5. The              was created in 1944 by 44 nations that met in Breton Woods, New Hampshire.

1. International bank
2. World Monetary Fund
3. World Trade Organization

D. International Monetary Fund

E. United Nations

6. The                     is seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations.

A. International Monetary Fund

2. International bank
3. United Nations
4. Canada's Export Development Corporation
5. Bank of Canada

7. Who is responsible for policing the world trading system?

1. International Monetary Fund
2. The World Bank

C. The World Trade Organization

D. Canada's Export Development Corporation

E. Bank of Canada

8. What was created at the same time as the International Monetary Fund?

A. World Bank

2. GATT
3. United Nations
4. Canada's Export Development Corporation
5. Bank of Canada

9. Although this organization is perhaps best known for its peacekeeping role, one of its central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development. What is it called?

1. World Bank
2. GATT

C. United Nations

D. Canada's Export Development Corporation

E. Bank of Canada

10.                   are the two macro factors that seem to underlie the trend toward greater globalization.
    1. The increase in global economic stability, and the slowdown in technological change
    2. The increase in barriers to the free flow of goods, services, and capital that has occurred since the end of World War II, and global economic stability
    3. The decline in barriers to the free flow of goods, services, and capital that has occurred in the past 10 years, and the slowdown in technological change

D. 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

E. Technological Change and the convergence of global product preferences

11. Firm X exports a number of products to users in other countries. This practice is referred to as                     .
    1. world exchange

B. international trade

3. cross-national barter
4. situational commerce
5. multinational diversification

12. XYZ, Inc. is an auto parts distributing warehouse that exports many of its products to consumers in other countries. XYZ Inc. can be described as engaging in:

A. international trade.

2. cross-border investments.
3. product development.
4. trading barriers.

5. international procurement.

13. Which of the following refers to the exporting of goods or services to consumers in another country?
    1. situational commerce
    2. world exchange

C. international trade

D. cross-national barter

E. foreign investment

14. Although Inco is a Canadian company, it has invested substantial business resources in activities outside Canada. This practice is referred to as:
    1. transnational commerce

B. foreign direct investment

3. international trade
4. organizational diversification
5. outsourcing

15. The investing of resources in business activities outside a firm's home country is referred to as:
    1. international trade
    2. domestic direct investment
    3. transnational barter

D. foreign direct investment

E. outsourcing

16. The                          is a treaty designed to remove barriers to the free flow of goods, services, and capital between nations.
    1. Global Agreement on Tariffs and Commerce
    2. United Nations Treaty on Trade

C. General Agreement on Tariffs and Trade

D. Multi-National Agreement on Tariffs and Commerce

E. The ILO

17. After World War II, the West committed to removing trade barriers between nations because of what experience?
    1. the loss of production from the war

B. retaliatory trade policies leading to the Depression

3. the General Agreement on Tariffs and Trade
4. massive waves of immigrants seeking jobs

5. the shift away from production to consumption

18. Under the umbrella of GATT there have been eight rounds of negotiations among member states. The                                                                                                                                                                                                                   was the most recent round of negotiations.

A. Uruguay Round

2. Malaysian Symposium
3. German Round
4. New Zealand Symposium
5. Cancun Round

19. Which of the following was not an outcome of the Uruguay Round of the GATT?
    1. reduced trade barriers
    2. extended GATT to cover services as well as manufactured goods
    3. established the World Trade Organization
    4. provided extended protection for patents, trademarks, and copyrights

E. reduced agricultural subsidies

20. If the Doha talks are ever completed, the biggest gain will come from what?
    1. trademarks

B. Agriculture

3. intellectual property
4. consumer goods
5. manufactured goods

21. The acronym GATT stands for:
    1. Global Agreement on Taxation and Tariffs
    2. Global Association of Technology and Trade
    3. General Agreement on Taxation and Trademarks

D. General Agreement on Tariffs and TradeE. General Accord of Transportation and Trade

22. The agency established at the 1993 Uruguay Round to police the international trading system is the                      .
    1. Global Trade Enforcement Administration
    2. World Tariff and Trade Bureau
    3. International Trade Enforcement Agency

D. World Trade Organization

E. The European bank of Reconstruction and Development

23. Suppose Petro Canada, an international oil company, had a complaint about a trade issue. The                     , a governing body established at the Uruguay Round in 1993 to police the international trading system, is an organization that Petro Canada could take its complaint to.

A. World Trade Organization

2. International Trade Monitoring Bureau
3. World Tariff and Trade Agency
4. International Trade Monitoring Agency
5. The United Nations

24. The acronym WTO stands for:
    1. Western Trade Organization
    2. World Tax Organization

C. World Trade Organization

D. World Tariff Organization

E. World Trade Operations

25. In the past decades, many countries, in addition to reducing trade barriers, have done what?
    1. decreased production
    2. increased wages

C. removed restrictions to FDI

D. increased tariffs

E. joined the United Nations

26. Since 1992, most of the world's changes to FDI have done what?
    1. blocked FDI

B. created a more favourable environment for FDI

3. had no impact on FDI
4. decreased production
5. decreased wealth

27. Since 1950, world trade has grown faster than what?
    1. world wage rates
    2. world population growth
    3. world income

D. world output

E. world housing production

28. Many of the changes that countries have made pertaining to foreign direct investment regulations have:
    1. made it harder for foreign companies to enter their markets

B. made it easier for foreign companies to enter their markets

3. had no effect on the ease upon which foreign companies can enter their markets
4. made it easier to foreign producers of raw materials to enter their markets but more difficult for foreign producers of finished products to enter their markets
5. prevented the expropriation of business assets by a foreign government

29. Which of the following statements is consistent with data from the World Trade Organization?

A. the volume of world trade has grown faster than the volume of world output since the 1950s.

2. the volume of world trade has grown slower than the volume of world output since the 1950s.
3. the volume of world trade and the volume of world output have grown at approximately the same rate since the 1950s.
4. the volume of world trade and the volume of world output have remained constant since the 1950s.
5. the volume of world trade is inversely related to the growth of world output.

30. According to your text, between 1950 to 2000, as world trade expanded by 20 times, world output grew by about

                 .

1. 1. 12 percent
   2. 1 percent
   3. 25 percent

D. 6 ½ times

E. 20 times

31. The average yearly outflow of FDI increased from about $25 billion in 1975 to a record of                                    in 2007, though it has fallen more recently.
    1. $500 billion
    2. $73 billion
    3. $1 trillion

D. $2 trillion

E. $11 trillion.

32. The steep drop in world trade occurred when? A. 1950-1951.

B. 1955-1956.

C. 1995-1996.

D. 2005-2006.

E. 2008-2009.

33. Between 1992 and 2010, the total flow of FDI from all countries increase by about                .
    1. 2 times
    2. 3 times
    3. 6 times
    4. 7 times

E. 9 times

34. The globalization of markets, the growth of world trade, and the increase in FDI has had what effect?

                                  .

1. 1. a decrease in production
   2. a decrease in world trade

C. companies find their home markets under attack from foreign competitors

D. companies are reducing their profits

E. companies are during to protectionist measures.

35. Evidence suggests that FDI is playing a(n):

A. decreasing role in the world economy

B.

increasing role in the world economy for services but a decreasing role in the world economy for

manufactured goods C.

increasing role in the world economy for manufactured goods but a decreasing role in the world

economy for services

D. increasing role in the world economy

E. a limited role in the world economy

36. Evidence suggests that FDI is playing a(n):
    1. decreasing role in the world economy
    2. increasing role in the world economy for services but a decreasing role in the world economy for manufactured goods
    3. increasing role in the world economy for manufactured goods but a decreasing role in the world economy for services

D. increasing role in the world economy

E. a limited role in the world economy

37. According to our textbook, the growing integration of the world economy is:

A .increasing the intensity of competition within the home market of a company in a wide range of manufacturing and service industries

2. decreasing the intensity of global competition in manufacturing industries, and increasing the intensity of domestic competition in services
3. increasing the intensity of global competition in manufacturing industries, and decreasing the intensity of domestic competition in services
4. narrowing the scope of global competition in a wide range of service, commodity, and manufacturing industries
5. Widening the opportunities for competing with manufacturing companies within their home market and narrowing the opportunities for competing with service companies in their home market.

38. Which of the following is a major cause for lowering the trade barriers of markets and production?

A. Technological change

2. Increased labour mobility
3. Elastic demand
4. Corporate greed
5. Consumer demand

39. According to our textbook, the single most important technological innovation has been the development of the

                        .

1. 1. telegraph

B. microprocessor

3. ocean container
4. airplane
5. telephone

40.   is the theory that predicts that the number of transistors on a computer chip doubles every 24 months.
    1. Brennan's Theorem
    2. Bailey's Law

C. Moore's Law

D. Ivan's Law

E. Global Micro Accelerant (GMA) Law

41. According to your textbook, between 1930 and 1990, the cost of a three-minute phone call between New York and London fell from $244.65 to $3.32. This decrease can be mainly contributed to
    1. open communication between governments.

B. the advent of the microprocessor.

3. continuing efforts to globalize.
4. high corporate ethical standards.
5. the deregulation of the telecommunications industry.

42. As of 2014 the number of Internet users around the world exceeds what?
    1. 5 million
    2. 100 million
    3. 1 billion

D. 3 billion

E. 5 billion

43. According to our textbook, e-commerce retail sales are expected to reach          by 2018 in the United states alone.
    1. $1 billion
    2. $50 billion

C. $500 billion

D. $750 billion

E. $1 trillion

44. The Web is viewed as a global what?

A. equalizer

2. way of decreasing production
3. force for decreasing FDI
4. way of reaching businesses at the expense of consumer
5. way for government to market to its population

45.   was not mentioned in our textbook as major innovation in transportation technology.
    1. Commercial jet aircraft
    2. Super freighters

C. E-commerce

D. The introduction of containerization

E. Both containerization and e-commerce were not mentioned

46. Due to containerization, the transportation costs associated with the globalization of production have:
    1. remained the same
    2. increased dramatically

C. declined

D. increased slightly

E. reduced insurance costs

47. As a result of a variety of innovations, the real costs of information processing and communication have

                         over the past two decades.

1. 1. fallen slightly
   2. increased slightly
   3. remained constant

D. fallen dramatically

E. had no impact on the cost of international business

48. Although the characteristics of the global economy have changed dramatically over the past 50 years, as late as the 1960s all of the following demographic characteristics were true except:
    1. the U.S. dominated the world economy

B. small, U.S. entrepreneurial firms dominated the international business scene

3. the U.S. dominated the world foreign direct investment picture
4. the U.S. was the world's largest industrial power
5. the U.S. dominated world trade

49. Which country was the world's most dominant industry power was in the early 1960s?
    1. Japan
    2. The United Kingdom
    3. Germany

D. The United States

E. Canada

50. In 1960, the U.S. accounted for about               of world output as measured by GDP.

A. 10.0%

B. 23.0%

C. 30.0%

D. 38.3%

E. 54.0%

51. In recent years, all of the following countries have seen their relative share of world output fall except:
    1. United States
    2. France
    3. Germany

D. China

E. United Kingdom

52. In 2013, the U.S.'s largest trade partner when it comes to exports from the United States was

                                              .

1. 1. United Kingdom
   2. Mexico
   3. China

D. Canada

E. South Korea

53. If we look into the future, most forecasts now predict a                       in world output accounted for by developing nations such as China, India, Indonesia, and South Korea, and a           in the share enjoyed by rich industrialized countries such as Britain, Japan, and the United States.

A. rapid rise; rapid decline

2. slight rise; slight decline
3. rapid decline; rapid rise
4. rapid rise; slight decline
5. stay the same; slight decline

54. The relative decline of the developed countries' share of world output                                         .
    1. will reduce the living standards of the citizens of developed countries.

1. 2. will increase competition for scarce resources and create political instability.

C. reflects the growing economic and industrial strength of developing countries.

D. will decrease prices but also reduce wages in Canada

E. will decrease job opportunities in Canada

55. Which of the following is an example of a developing nation?

A. Thailand

2. Britain
3. Japan
4. United States
5. Canada

56. According to your text, the World Bank estimates that today's developing nations may account for more than percent of world economic activity by 2020.
    1. 35
    2. 50
    3. 55
    4. 65

E. 60

57.   is not considered to be a "developing" nation.
    1. Brazil
    2. India
    3. China

D. Japan

E. Mexico

58. The foreign direct investment by non-U.S. firms was motivated primarily by the following two factors:

A. the desire to disperse production activities to optimal locations; and the desire to build a direct presence in major foreign markets

2. the desire to disperse production activities to optimal locations; and the desire to influence foreign

exchange rates

3. the desire to influence foreign exchange rates; and the desire to influence political developments in foreign countries
4. the desire to build a direct presence in major foreign markets; and the desire to influence political developments in foreign countries
5. the desire to reduce dependence on the United States and to increase direct access to markets

59. In the 1960s, what was then seen as an economic threat to Europe?

A. The dominance of U.S. firms

2. Technological innovations
3. Low-cost transportation
4. Low-cost global communication networks
5. Reduction in trade barriers

60. Throughout the 1990s, the amount of investment directed at both developed and developing nations did what?
    1. stayed the same
    2. decreased

C. increased

D. was highly variable

E. decreased, then increased

61. Among developing nations, the largest recipient of foreign direct investment has been which country?

A. China

2. India
3. Japan
4. Canada
5. the United States

62. Since the 1960s, what has been a notable trend regarding multinational enterprises?
    1. the decline of the multinational enterprise
    2. the decline of the Canadian multinational enterprise

C. the rise of non-U.S. multinationals

D. the decline of the Japanese multinational enterprise

E. the rise of U.S. multinationals

63. What kind of enterprise is a business that has productive activities in two or more countries?
    1. cross-cultural

B. multinational

3. varied-national
4. diverse-national
5. multi-domestic

64. Recently there has been                    in the number of smaller firms that are multinationals.

A. a significant growth

2. no change
3. a significant decline
4. some growth
5. some decline

65. General Electric Corporation has productive activities in a number of countries. As a result, it would be appropriate to refer to General Electric as a      corporation.
    1. transnational
    2. diverse-national
    3. cross-national

D. multinational

E. global

66. Iceculture Inc., of Ontario employs 40 people and exports around the world. It would be considered
    1. a multinational company.
    2. a transnational company.
    3. a cross-border national company.

D. a mini-multinational.

E. a U.S. dominated company.

67. Since the 1960s, there have been two notable trends in the demographics of the multinational enterprise.

These two trends have been:

1. 1. the rise of non-U.S. multinationals and the disappearance of mini-multinationals
   2. the decline of non-U.S. multinationals and the decline of mini-multinationals
   3. the decline of non-U.S. multinationals and the growth of mini-multinationals

D. the rise of non-U.S. multinationals and the growth of mini-multinationals

E. the rise of U.S. multinationals and the growth of mini-multinationals

68. The economies of most of the former Communist countries can best be described as:

A. in poor condition with high risk associated with doing business there

2. steady growth, especially since 2009
3. dominated by multinationals
4. robust and growing stronger
5. closed to many international businesses due to high tariffs

69. Disturbing signs of growing unrest and totalitarian tendencies continue to be seen in many                 

states.

1. 1. Western European
   2. European
   3. Northern European

D. Eastern European

E. South American states

70. If China continues to grow at its current rate, by 2020 the average income per capita will be about

$13,000, roughly equivalent to what country today?

1. 1. Canada
   2. United States

C. Spain

D. India

E. Latin America

71. Which of the following statements is not true regarding the majority of Latin American countries?
    1. governments are selling state-owned enterprises to private investors

1. 2. foreign investment is welcome
   3. debt and inflation are down

D. neither democracy nor free market reforms have seemed to take hold

E. None of these answers is correct

72. The last quarter of the 20 th

century experienced                         in the global economy.

1. 1. increased stability
   2. slow-moving
   3. virtually no changes

D. rapid changes

E. great concerns over potential disruptions

73. Economists argue that increased international trade and cross-border investments will result in

                         prices for goods and services.

1. 1. higher
   2. stable

C. lower

D. unstable

E. variable

74.   is not a benefit of globalization.
    1. Lowering prices for goods
    2. Raising the incomes of consumers

C. Slowing economic growth

D. Helping to create jobs in all countries that choose to participate

E. More leisure time

75. Economists, politicians, and business leaders believe that the                to international trade and investment is the engine driving the global economy toward greater prosperity.

A. falling barriers

2. cross-border investments

3. U.N. policies
4. trading barriers
5. NAFTA

76. One frequently voiced concern about globalization is that it destroys manufacturing jobs in wealthy advanced economies such as Canada. The basic thrust of the critics' argument is:

A.

developing nations will recruit employees from the more advanced economies, thereby depleting their labour pools

B

.

globalization increases the pace of the shift from a world economy based on manufactured goods to a world economy based on services

C. falling trade barriers allows firms to move their manufacturing activities offshore to countries where wage rates are much lower

D

.

the governments of developing countries will heavily subsidize their primary industries, making competing products produced in advanced economies less attractive

E. Canadian workers are overpaid and the true value of a manufacturing job is much lower

77. Outsourcing has even extended to the Canadian                  industry.
    1. auto
    2. mineral extraction

C. services

D. home construction

E. lumber

78. Critics use the following argument to suggest that globalization is a contributing factor to an increase in pollution.

A

.

globalization results in an increase in the amount of activity that takes place in companies that do not have adequate pollution controls

B

.

globalization results in increased commerce between countries, which results in an increase in the amount of transportation activity (e.g. trains, barges, air cargo, trucks, etc.)

C. firms that operate in countries that have adequate pollution regulations have a tendency to move theirmanufacturing operations to countries that have less stringent or no pollution controls to avoid the cost of regulation

D.

globalization results in increased production, which has the undesirable side-effect of increased pollution

E. people in developing countries are used to coping with more pollution

79. What does NAFTA stand for?

A. North American Free Trade Agreement

2. North Atlantic Free Trade Agency
3. North American Federation of Trade Advocates
4. National Alliance for Technology Advancement
5. North American Federal Treaty Association

80. Many critics of globalization argue that outsourcing leads to increased use of                     labour practices in developing countries.

A. exploitive

2. fair
3. underground
4. neo-colonialist
5. non-competitive

81. What is the primary purpose of the World Trade Organization?

A. arbitrate of trade disputes B.

act as a "watchdog" for countries that lower their pollution standards in an effort to attract more foreign manufacturing activity

3. set tariffs for countries that signed the GATT agreement
4. monitor the implementation of trade agreements such as NAFTA
5. reduce the number of job losses in member countries

82. Supranational organizations such as the WTO are criticized for
    1. interfering in the regulation of prices of a country's natural resources.
    2. ruling in favour of rich western countries at the expense of poor developing countries.

C. focusing on economics and not on democracy and environmental responsibility.

D. limiting its actions to what the WTO member states agree to.

E. encouraging economic stagnation in poor countries so that rich countries can grow faster.

83. Managing an international business is different from managing a purely domestic business for all of the following reasons except:
    1. countries are different
    2. international transactions involve converting money into different currencies

C .the range of problems confronted by a manager in an international business are narrower than those confronted by a manager in a domestic business

D

.

an international business must find ways to work within the limits imposed by government intervention in the international trade and investment system

E. different languages have to be learned

84. The world's poorest nations have also faced                         .
    1. standardization
    2. alignment
    3. global simplification

D. economic stagnation

E. consumerization

85. The Tim Hortons case study is an example of what?
    1. how easily Canadian firms can enter the US market
    2. the similarity of Canadian and US consumer tastes
    3. Canadian firms buying up US firms
    4. protests against globalization

E. the difficulty of Canadian firms expanding internationally

86. Describe the concept of globalization. What are the major opportunities and challenges that globalization has created for business organization?

87. Describe the two main facets of globalization. Explain how each of these components of globalization has helped create the shift towards a more integrated world economy.

88. Describe the meaning of the term "trade barriers"? What measures have been taken by the world community to reduce the impact of trade barriers on international trade?

89. Describe the impact of the development of the World Wide Web on global commerce.

90. Define the term "foreign direct investment (FDI)." How does the term "foreign direct investment" differ from the term "international trade?"

91. Discuss the primary advantages and disadvantages of globalization. Do you believe the advantages outweigh the disadvantages? How can the effects of the disadvantages of globalization be reduced?

92. Country competitiveness is not something that is permanent or fixed. The dominant features of the global economy are the rapid changes relative economic and competitive status of different countries. Canada

is not immune to these changes. We have seen our total share of the global economy decrease and the loss of many industries. The anti-globalization movement has been active in Canada. In particular they have been critical of multinational corporate power and argued against global and regional agreements on economic growth and the lowering of trade barriers. Others feel that globalization is inevitable and contributes to the well being of people around the world.

1. Consider the overall impact of globalization on Canada from the perspective of a software developer- has it been positive or negative? Explain your
2. What kinds of strategies could a Canadian developer of software employ to reduce the negative impacts and take advantage of the positive aspects? Explain your

93. Why is international trade important to Canada?

94. You manage a company that produces and sells cameras that work under water. The camera bodies are made in China, in a facility your company owns, and which employs about 500 people. The electronics

for the camera are bought from a supplier in South Korea. The lens and optics are made in your own facility in Japan, which employs about 300 people. The final product is also assembled and packaged at this facility in Japan. Your company currently employs about 350 people in Canada (head office functions, advertising, legal, and sales). You are a successful company, in business for many years, and you hope to expand your sales around the globe.

What is this type of company called?

95. You manage a company that produces and sells cameras that work under water. The camera bodies are made in China, in a facility your company owns, and which employs about 500 people. The electronics

for the camera are bought from a supplier in South Korea. The lens and optics are made in your own facility in Japan, which employs about 300 people. The final product is also assembled and packaged at this facility in Japan. Your company currently employs about 350 people in Canada (head office functions, advertising, legal, and sales). You are a successful company, in business for many years, and

you hope to expand your sales around the globe. What are some other examples of this type of firm?

96. You manage a company that produces and sells cameras that work under water. The camera bodies are made in China, in a facility your company owns, and which employs about 500 people. The electronics

for the camera are bought from a supplier in South Korea. The lens and optics are made in your own facility in Japan, which employs about 300 people. The final product is also assembled and packaged at this facility in Japan. Your company currently employs about 350 people in Canada (head office functions, advertising, legal, and sales). You are a successful company, in business for many years, and you hope to expand your sales around the globe.

What have been the two most notable trends in these type of enterprises since the 1960s?

97. You manage a company that produces and sells cameras that work under water. The camera bodies are made in China, in a facility your company owns, and which employs about 500 people. The electronics

for the camera are bought from a supplier in South Korea. The lens and optics are made in your own facility in Japan, which employs about 300 people. The final product is also assembled and packaged at this facility in Japan. Your company currently employs about 350 people in Canada (head office functions, advertising, legal, and sales). You are a successful company, in business for many years, and you hope to expand your sales around the globe.

What are the future prospects of smaller firms that operate as your firm does internationally. Why?