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International Business, 2e (Morris)
Chapter 1 Globalization

Testbank A

1) Borivia is a country in Eastern Europe that was ruled by Auleria, a country in Western
Europe, for over a century. It gained independence from Auleria in 1923. Now, Borivia has its
own government. Given this information, it can be said that Borivia is a(n) ________.
A) monopoly
B) monarchy
C) sovereign nation
D) emerging market
Answer: C
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

2) Dasom Inc., a South Korean smartphone manufacturer, sells its smartphones in 64 countries
around the world and has offices in 36 counties. Dasom's business expansion best exemplifies
________.
A) globalization
B) nationalization
C) subsidization
D) commodification
Answer: A
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

3) In 1995, the government of Duyat, a country in Asia, began major economic reforms that
allowed free trade relations with other countries. Duyat started exporting iron ore and limestone
to other countries around the world. Its domestic market strengthened, and it experienced an
economic boost. This scenario best exemplifies ________.
A) nationalization
B) subsidization
C) commodification
D) globalization
Answer: D
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

1
4) The Commerce Coalition (CC) is an intergovernmental organization operating in South Asia
that consists of seven member nations. The CC was established to enable free trade across these
seven countries of South Asia. A citizen of any of the member nations can easily purchase goods
produced in another member nation without paying additional taxes. Given this information, it
can be said that the large market created by the CC is an example of a(n) ________.
A) monopolistic market
B) globalized market
C) oligopolistic market
D) gray market
Answer: B
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

5) Spain and Italy are both members of the European Union. Nayeli, a Spaniard, is able to
purchase Italian-made bags from a handbag store in Spain without paying additional taxes. The
market created by the European Union is a(n) ________.
A) monopolistic market
B) oligopolistic market
C) gray market
D) globalized market
Answer: D
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

6) Which of the following is true of globalization?

A) It makes it difficult to buy and sell internationally.
B) It increases socioeconomic equality in emerging markets.
C) It makes it difficult for employers to move jobs to cheaper locations.
D) It builds on the principle of sovereignty to strengthen the relationships that connect us.
Answer: D
Diff: 1
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

2
7) Which of the following best illustrates global convergence?
A) Sylvester Inc., an American car-manufacturing company, uses the Japanese business
philosophy of kaizen.
B) Hexagon Corp., a steel company in the United States, has many plants in different parts of the
country.
C) Hawke Inc., an American computer manufacturer, imports raw materials from Nigeria, and in
return it invests in Nigeria's infrastructure development.
D) Micra Inc., an Indian mining company, engages in corporate social responsibility by
providing training services to local schools.
Answer: C
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

8) When the demand for smartphones increased in Preteresia, a country in Eastern Europe, the
smartphone manufacturers started importing silicon, a raw material used in the manufacture of
smartphones, from Abresia, a country in Africa. In return, Preteresia helped build Abresia's
infrastructure to facilitate the efficient extraction of silicon. This scenario best illustrates
________.
A) monopolization
B) centralization
C) market segmentation
D) global convergence
Answer: D
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

9) Desktop computers are used by people all around the world. One of the challenges faced by
computer manufacturing companies is to overcome the cultural and economic differences across
communities that make it difficult for them to sell their products. Given this information, it can
be said that desktop computers are ________.
A) industrial products
B) consumer products
C) natural products
D) perishable products
Answer: B
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

3
10) Nebula Inc. is an American smartphone manufacturer that sells smartphones in 36 countries
across the globe. Nebula makes both low-end and high-end smartphones to cater to the needs of
different markets across the world. There is a high demand for Nebula's low-end smartphones
chiefly in developing nations. Its high-end smartphones have buyers mostly in developed
nations. One of the challenges that Nebula faces is planning its sales strategy to suit different
markets. Given this information, it can be said that Nebula's smartphones are an example of
________.
A) natural products
B) perishable products
C) consumer products
D) industrial products
Answer: C
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

11) Steel manufacturers use limestone as one of the raw materials in the production of steel. It
can be said that limestone is a(n) ________.
A) industrial product
B) convenience product
C) unsought product
D) specialty product
Answer: A
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

12) Niall is an assembly-line worker in a car-manufacturing firm in Detroit. Assembly-line

workers like Niall constitute the ________ of the car-manufacturing firm.
A) visible artifacts
B) intangible resources
C) factors of production
D) economies of scale
Answer: C
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

4
13) Limestone, shells, and chalk are some of the raw materials used in the manufacture of
cement. Raw materials like these constitute the ________ of the cement industry.
A) factors of production
B) visible artifacts
C) intangible resources
D) economies of scale
Answer: A
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

14) Which of the following is true of globalization of production?

A) It includes obtaining land, labor, and capital locally.
B) It includes the component parts, skill sets, or information required to produce a product or
service.
C) It is limited to manufacturing.
D) It helps companies take advantage of national differences in cost and quality.
Answer: D
Diff: 1
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

15) Russet Inc., an American stainless steel manufacturer, sources iron ore from Australia for the
manufacture of steel. It saves on raw material costs as iron ore is cheaper in Australia. This
scenario best illustrates ________.
A) the globalization of production
B) the economies of scope
C) vertical integration
D) market segmentation
Answer: A
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

16) Which of the following is true of arbitrage?

A) It is limited to manufacturing.
B) It involves searching for deals on production factors across geographic boundaries.
C) It treats differences across nations as constraints.
D) It involves obtaining land, labor, and capital from domestic markets.
Answer: B
Diff: 1
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

5
17) Imperial Inc., an Irish semiconductor manufacturer, sources germanium, a raw material used
in the production of semiconductors, from China. It takes advantage of differences across
countries by treating them as business opportunities. This scenario best exemplifies ________.
A) arbitrage
B) privatization
C) franchising
D) licensing
Answer: A
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

18) Which of the following examples best illustrates the globalization of production?
A) Silva Hotels & Resorts, a Brazilian hotel chain, provides hospitality services to tourists from
all around the world.
B) Taupe, an Australian non-profit organization, is funded by Australian multinational
companies.
C) Hazel Inc., an Irish textile company, engages in corporate social responsibility.
D) Tanner Inc., an American publishing company, outsources writing services to India.
Answer: D
Diff: 2
Learning Objective: 1.1 Identify the causes and consequences of globalization.
AACSB: Analytic
Bloom's Taxonomy: Application

19) Which of the following is an effect of the Internet on globalization?

A) It triggered billion-dollar investments in fiber-optic telecommunications cables.
B) It led to the demise of traditionally local businesses.
C) It inhibited free trade.
D) It increased the barriers to competition.
Answer: A
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

6
20) According to author Thomas Friedman, which of the following is true of the flat world?
A) Ten percent of activity is conducted globally, and the remaining ninety percent is conducted
domestically.
B) The few cities that dominate international financial markets—Frankfurt, Hong Kong, London,
New York, Singapore—represent the peak of global integration.
C) Most of the world's cities are much more connected at the local level than they are to any
other domestic city, and more connected domestically than to any foreign city.
D) Individuals in poor countries with limited infrastructure are able to compete with people in
rich, well-developed countries.
Answer: D
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

21) Dustin is a lecturer at a community college in Memphis. He believes that the globalization of
markets has brought the world closer. He asserts that globalization has enabled free access to
markets with less barriers to competition and uniform implementation of trade laws. Dustin's
beliefs are consistent with the theory of the ________ put forth by the author Thomas Friedman.
A) flat world
B) round world
C) spiky world
D) divided world
Answer: A
Diff: 2
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Analytic
Bloom's Taxonomy: Application

22) Maya Inc., an Indian apparel company, now sells its apparels in the United States, Canada,
Australia and New Zealand. Derek, the CEO of Maya Inc., believes that free access to markets,
few barriers to competition, and uniform trade regulations have enabled Maya Inc. to expand its
business operations internationally. Derek's beliefs are consistent with Thomas Friedman's theory
of the ________.
A) round world
B) spiky world
C) divided world
D) flat world
Answer: D
Diff: 2
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Analytic
Bloom's Taxonomy: Application

7
23) Bianca is a student of international business at the University of Phoenix. She is of the
opinion that the world is not fully connected. She believes that the global financial markets are
controlled only by a few cities and that most businesses still operate in domestic markets.
Bianca's views are consistent with the ________ argument.
A) flat world
B) round world
C) spiky world
D) coherent world
Answer: B
Diff: 2
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Analytic
Bloom's Taxonomy: Application

24) Which of the following best defines the 10% presumption?

A) Only about 10 percent of products produced in the United States are industrial products; the
remaining 90 percent are consumer products.
B) Only about 10 percent of the world's organizations are multilateral; the remaining 90 percent
are bilateral.
C) Only about 10 percent of countries are sovereign nations; the remaining 90 percent are not
sovereign.
D) Only about 10 percent of activity is conducted globally; the remaining 90 percent is domestic.
Answer: D
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

25) According to Amartya Sen, a Nobel Prize–winning economist, globalization:

A) has enriched the world scientifically and culturally.
B) perpetuates inequality throughout the world.
C) has economic repercussions.
D) has led to the advent of the "round world."
Answer: A
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

8
26) Sean, a lecturer at Oxford University, is a staunch advocate of globalization. He asserts that
globalization has benefited many people scientifically, culturally, and economically. Which of
the following statements supports his assertion?
A) As a result of globalization, 90 percent of all business investments are domestic.
B) As a result of globalization and the spread of new technologies, levels of socioeconomic
inequality have decreased.
C) Globalization makes lifesaving devices, medicines, and technologies more readily available to
the greater world population.
D) Globalization helps developed markets by making it easy for employers to move jobs to
cheaper locations.
Answer: C
Diff: 3
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Analytic
Bloom's Taxonomy: Evaluation

27) According to Nobel Prize–winning economist, Joseph Stiglitz, globalization:

A) has led to the advent of the "flat world."
B) benefits many people around the world economically.
C) perpetuates inequality throughout the world.
D) has enriched the world scientifically and culturally.
Answer: C
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

28) According to critics of globalization, ________.

A) new technologies and the investment of foreign capital in developing countries may actually
increase levels of inequality
B) as countries trade and do business with one another, they make products and services more
expensive
C) globalization in developed markets makes it difficult for employers to move jobs to cheaper
locations
D) globalization decreases the rate of development for lifesaving devices and medicines that
improve living conditions
Answer: A
Diff: 1
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Reflective Thinking
Bloom's Taxonomy: Comprehension

9
29) Cora, an American citizen, is a critic of globalization. She believes that globalization has
done more harm than good. She contends that globalization has detrimental effects on developed
markets. Which of the following statements supports her contention?
A) Globalization has increased wage-related expenses.
B) Globalization has decreased the rate of development for lifesaving devices.
C) Globalization makes products and services expensive.
D) Globalization makes it easy for employers to move jobs to cheaper locations.
Answer: D
Diff: 3
Learning Objective: 1.2 Discuss the "flat world, round world" debate.
AACSB: Analytic
Bloom's Taxonomy: Evaluation

30) Sanctity is a non-profit group that works toward increasing female literacy globally. It strives
to promote women's education in developing nations. Its members are engaged in providing
training and advisory services to schools and colleges in developing nations. Sanctity is funded
and managed by several governments worldwide. Given this information, it can be said that
Sanctity is a ________.
A) sole proprietorship
B) limited liability company
C) multilateral organization
D) multinational corporation
Answer: C
Diff: 2
Learning Objective: 1.3 Explain the roles of the organizations that regulate global markets.
AACSB: Analytic
Bloom's Taxonomy: Application

31) Which of the following best illustrates a multilateral organization?

A) Tanner Inc., an American publishing company, outsources writing services to India.
B) Silva Hotels & Resorts, a Brazilian hotel chain, provides hospitality services to tourists from
all around the world.
C) Universal Trade Forum, an organization that fosters international trade, is funded and
managed by representatives from several governments.
D) Cherish Inc., an American apparel brand, has branches in 42 countries around the world.
Answer: C
Diff: 2
Learning Objective: 1.3 Explain the roles of the organizations that regulate global markets.
AACSB: Analytic
Bloom's Taxonomy: Application

10