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In order for a country to specialize its production, what must there be? |
international division of labor |
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The existence of an international division of labor among countries enables those countries to have what? |
specialized production |
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The global economy can have specialized production because of what? |
The international division of labor |
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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. |
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Country A would have an absolute advantage over Country B in the production of computers under what circumstance? |
Companies in Country A can produce computers at a lower cost. |
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Country X would enjoy an absolute advantage in the production of clothing under what circumstance? |
Its production costs for clothing were the lowest in the world |
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What gives a country a comparative advantage? |
When it gives up less than others to engage in a particular type of production |
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Under what circumstance would a country have a comparative advantage in the production of a certain good? |
It has a lower opportunity cost for production of that good. |
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Country X would have a comparative advantage in the production of cotton under what circumstance? |
Country X didn’t have to give up a more profitable form of production in order to grow cotton. |
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Why does interdependence bring economic growth? |
Interdependence enables specialized production, which is more efficient. |
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Why do some countries fear increasing economic interdependence? |
Interdependence involves a loss of control over the national economy. |
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Why does the growth of international trade lead to a rising global standard of living? |
International trade enables specialization, which brings increased efficiency and greater competition. |
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Which of these best characterizes the flow of wealth during the period of colonization? |
There was a one-way flow of wealth from the colonies to their colonial masters. |
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What was the result of developed countries extracting resources from their colonies? |
There was a one-way flow of wealth favoring the colonizers. |
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How did the colonizers benefit from the colonies they controlled? |
The colonizers used the resources of their colonies to grow their own economies. |
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Why do high tariff levels restrict international trade? |
Traded goods cost more when there are high tariffs, and this limits their sale. |
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Why do protective tariffs lead to reduced international trade? |
Protective tariffs increase the price of goods and limit the sale of those goods. |
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Why does reducing trade barriers promote increased international trade? |
Free trade leads to lower prices and greater sales. |
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Match each current trend in the global economy with one of its economic effects |
Improved communication: Easier outsourcing; Trade liberalization: Increased trade; Infrastructure development: Cheaper transportation; Industrialization: Greater productivity. |
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Match each current trend with one of its economic effects. |
Improved communication: Makes it easier for International businesses to operate efficiently; Trade liberalization: Provides an incentive for countries to export more goods; Infrastructure development: Facilitates less expensive international trade; Industrialization: Increases productivity and lowers prices. |
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Match each current trend in the global economy with the benefit it provides. |
Improved communication: Facilitates international trade; Free-trade policies: Increases the mobility of goods and labor; Development of infrastructure: Reduces distribution costs; Industrialization: Helps developing countries. |
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Why does globalization give countries an incentive to reduce wages for their workers? |
Lower production costs help lure foreign investment. |
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Why does globalization lead to a reduction in wages in developed countries? |
Increased mobility allows producers to move jobs to lower-cost labor markets. |
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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. |
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Why do central banks play an important role in the global economy? |
They set each country’s monetary policies. |
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Why do the actions of central banks have an important effect on the global economy? |
Control of the money supply determines how much money is available for international trade. |
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Why do central banks play an important role in the global economy? |
They control the foreign currency reserves that are used for international trade |
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Which of these is a gift of money from one government to another? |
Foreign aid |
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Why is foreign aid given? |
In order to help needy countries |
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What is the main purpose of foreign aid? |
Alleviate poverty and underdevelopment |
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Match each international organization with its purpose. |
Bank for International Settlements (BIS): Create financial stability; International Monetary Fund (IMF): Prevent economic crises; World Bank: Reduce poverty; World Trade Organization (WTO): Promote free |
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Match each international organization with one of its functions. |
Bank for International Settlements (BIS): Coordinate banking regulations; International Monetary Fund (IMF): Provide short-term emergency loans; World Bank: Provide long-term development loans; World Trade Organization (WTO): Generate multilateral trade agreements. |
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Match each international organization with one of its purposes. |
Bank for International Settlements (BIS): Provide a forum for coordinating banking regulations; International Monetary Fund (IMF): Make economic policy recommendations; World Bank: Promote sustainable development; World Trade Organization (WTO): Mediate and resolve trade disputes. |
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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 |
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Why does the IMF require countries that accept its loans to follow its policy recommendations? |
The IMF wants to help struggling countries better manage their economies. |
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Why does the IMF impose conditions on its loans? |
To help manage the economies of struggling countries |
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What is the main purpose of the loans made by the World Bank? |
To help countries achieve sustainable development |
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Why does the World Bank charge little or no interest on the loans it makes? |
Its main purpose is to promote development, not make profits. |
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What does the World Bank hope will result from the loans it makes to developing countries? |
An improved climate for foreign investment |
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How does the WTO help stabilize the global economy? |
By assuring that producers will have open access to necessary resources |
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How does the WTO promote global free trade? |
By creating multilateral trade agreements |
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What is the main goal of the WTO? |
To assure that international trade flows smoothly and freely |
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Match each economic activity with one of its purposes. |
World Bank loans: Eliminate poverty; Foreign aid: Provide emergency relief; Trade embargo: Punish an offending government; Outsourcing: Reduce production costs. |
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Match each economic activity with its main purpose. |
IMF loans: Stabilize the global economy; Foreign aid: Help needy governments; Boycott: Influence economic decisions; Offshoring: Reduce production costs. |
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Match each economic activity with its main purpose. |
WTO agreements: Promote free trade; Boycott: Punish unfair practices; Offshoring: Reduce production costs; Foreign aid: Help needy governments. |
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Why has globalization led to an increasing income gap between rich and poor countries? |
Countries with well-established infrastructure and productive capacities have more competitive industries. |
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Why are the majority of the world’s countries left on the margins of globalization? |
Many countries are too underdeveloped to take advantage of the opportunities presented by increasing international trade. |
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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. |
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Match each type of country with one of its central features |
Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Little infrastructure or industry; New globalizer: Rapid economic growth |
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Match each type of country with one of its central features. |
Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Little infrastructure or industry; New globalizer: Rapidly increasing levels of exports. |
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Match each type of country with one of its central features. |
Developed: High level of productive capacity; Developing: Low standard of living; Underdeveloped: Low levels of industrial capacity; New globalizer: High levels of foreign investment. |
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Why don’t developing countries usually benefit from free-trade policies? |
Their industries are too weak to compete in the international market. |
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Why don’t many developing countries benefit from the spread of free trade? |
They have weak domestic industries |
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Because most developing countries have weak domestic industries, they do not benefit from what? |
Free-trade policies |
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Why has globalization contributed to the rise of international terrorism? |
Globalization can bring about dislocation and inequality. |
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How has globalization contributed to the recent increase in international terrorism? |
The downsides of globalization affect many people who often feel they have nowhere to turn other than violence. |
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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 |
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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. |
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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. |
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How has globalization helped work against human rights violations around the world? |
Improved global communications brings these abuses to the world’s attention. |
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Why is globalization potentially damaging to the environment? |
Protecting the environment increases production costs and reduces competitiveness. |
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What is the primary reason that globalization leads to greater global pollution? |
Environmental protection is expensive, and reduces a company’s competitiveness in the global market. |
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Why does globalization lead to increasing environmental damage? |
Environmental-protection regulations increase compliance costs and decrease economic competitiveness. |
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Match each practice with an example of its use |
Offshoring: A U.S. car company begins making certain car parts in Bangladesh; Boycott: Consumers refuse to buy goods from companies that use child labor; Trade sanctions: Japan imposes a 100% tariff on cars coming from Europe and the United States; Conditionality: The IMF requires a loan recipient to privatize its oil industry. |
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Match each global business practice with an example of its use. |
Outsourcing: A U.S. computer company buys its memory chips from a company in Taiwan; Boycott: A group of consumers refuses to buy clothing made in Indonesian sweatshops; Conditionality: The IMF asks a government to cut its taxes before receiving an emergency loan. |
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Match each global business practice with an example of its use. |
Embargo: The United States forbids its citizens from doing business with a government that has ties to terrorist groups; Insourcing: A South Korean car company opens a factory in the United States; Conditionality: The IMF requires a government receiving a loan to balance its budget |
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Which of these would cause job loss in the United States? |
Inexpensive imported televisions |
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Why has globalization led to some job loss in the United States? |
Labor costs are lower in other countries. |
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Why do lower labor costs in other countries lead to job loss in the United States? |
It enables foreign producers to undersell domestic producers. |
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What has been the main benefit of globalization for the United States? |
Economic growth |
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What has been the main drawback of globalization for the United States? |
Wage reductions |
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Which of these is a problem that globalization poses for the U.S. government? |
Increased security concerns |
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All of the following have been negative effects of globalization except what? |
Higher prices for consumers |
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What is one reason why some people are critical of globalization? |
It leads to increased damage to the environment. |
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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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