6.4.2Test (CST)- The Global Game Board

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In order for a country to specialize its production, what must there be?

An international division of labor

Country X would have an absolute advantage over Country Y in the
production of automobiles under what conditions

Country X can manufacture cars more cheaply.

What gives a country a comparative advantage?

When it gives up less than others to engage in a particular type of production

Why does interdependence bring economic growth?

Interdependence enables specialized production, which is more efficient.

Why do some countries fear increasing economic interdependence?

interdependence involves a loss of control over the national economy.

Why does the growth of international trade lead to a rising global standard of

international trade enables specialization, which brings increased efficiency and greater competition.

Which of these best characterizes the flow of wealth during the period of

There was a one-way flow of wealth from the colonies to their colonial masters.

How did the colonizers benefit from the colonies they controlled?

The colonizers used the resources of their colonies to grow their own economies.

Why do high tariff levels restrict international trade?

Traded goods cost more when there are high tariffs, and this limits their sale.

Why does globalization give countries an incentive to reduce wages for their

Lower production costs help lure foreign investment

Why does globalization lead to a reduction in wages in developed countries?

Increased mobility allows producers to move jobs to lower-cost labor markets.

Why does globalization lead to a reduction in prices for goods and services?

Competition for jobs drives down wages, which helps companies lower their prices.

Why do central banks play an important role in the global economy?

They set each country’s monetary policies. Control of the money supply determines how much money is available for international trade. They control the foreign currency reserves that are used for international trade.

Which of these is a gift of money from one government to another?

. Foreign aid

Why is foreign aid given?

In order to help needy countries

What is the main purpose of foreign aid?

Alleviate poverty and underdevelopment

Why does the IMF impose conditionality on countries that accept its loans?

The IMF wants to help fix the economies of countries that need its help.

What is the main purpose of the loans made by the World Bank?

to help countries achieve sustainable development

What does the World Bank hope will result from the loans it makes to
developing countries?

An improved climate for foreign investment

How does the WTO help stabilize the global economy?

By assuring that producers will have open access to necessary resources

How does the WTO promote global free trade?

By creating multilateral trade agreements

Why has globalization led to an increasing income gap between rich and poor

Countries with well-established infrastructure and productive capacities have more competitive industries

Why are the majority of the world’s countries left on the margins of

Many countries are too underdeveloped to take advantage of the opportunities presented by increasing international trade.

Why hasn’t globalization benefited the majority of the world’s
underdeveloped countries?

Underdeveloped countries don’t have the productive capacities necessary to take advantage of increasing international trade

Why don’t developing countries usually benefit from free-trade policies?

Their industries are too weak to compete in the international market.

Why has globalization contributed to the rise of international terrorism?

Globalization can bring about dislocation and inequality. The downsides of globalization affect many people who often feel they have nowhere to turn other than violence.

Why do many people object to globalization?

They feel that globalization mainly serves the interests of the United States at the expense of poor countries.

Why don’t companies doing business in countries with repressive
governments object to the human rights abuses?

Companies taking advantage of low labor costs don’t make trouble for repressive governments.

Why don’t companies that do business in countries where human rights are
violated tend to fight against these abuses?

They tend to care more about a safe investment climate than about human rights.

How has globalization helped work against human rights violations around
the world?

Improved global communications brings these abuses to the world’s attention.

Why is globalization potentially damaging to the environment?

Protecting the environment increases production costs and reduces competitiveness.

What is the primary reason that globalization leads to greater global

Environmental protection is expensive, and reduces a company’s competitiveness in the global market.

Which of these would cause job loss in the United States?

Inexpensive imported televisions

Why has globalization led to some job loss in the United States?

. Labor costs are lower in other countries.

Why do lower labor costs in other countries lead to job loss in the United

It enables foreign producers to undersell domestic producers.

What has been the main benefit of globalization for the United States?

Economic growth

What has been the main drawback of globalization for the United States?

. Wage reductions Increased security concerns

All of the following have been negative effects of globalization except what?

Higher prices for consumers

What is one reason why some people are critical of globalization?

It leads to increased damage to the environment.

Which of these is a reason why many don’t support globalization?

It only benefits a handful of the world’s countries.

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