Chapter 1

Question 1

Globalization?

Answer 1

The shift toward a more integrated and interdependent world economy. Globalization has several facets, including the globalization of markets and the globalization of production.

Question 2

Globalization of markets

Answer 2

This refers to the merging of historically distinct and separate national markets into one huge global marketplace.

Question 3

Globalization of production

Answer 3

This refers to the sourcing of goods and services from locations around the globe to take advantages of national differences in the cost and quality of Factors of production

Question 4

What are factors of production?

Answer 4

labor, energy, land, and capital

Question 5

General Agreement on Tariffs and Trade (GATT)

Answer 5

1. They lowered barriers,

2. They established World Trade Organization (WTO)

Question 6

World Trade Organization

Answer 6

the organization primarily responsible for policing the world trading system and making sure nation-state adhere to the rules that are laid down in treaties.

1. 164 Nations accounting for, 98% of world trade are WTO members.
2. WTO has been promoting the lowering of barriers to trade and investment

Question 7

International Monetary Fund (IMF)

Answer 7

They were established to maintain order in the international monetary

Question 8

World bank

Answer 8

They were set up to promote economic development.

Question 9

United Nations (UN)

Answer 9

Was established on October 24th in 1945 by 51 countries committed to preserving peace through international cooperation and collective security. Now they have 194 memberships

Question 10

Group of Twenty (G20)

Answer 10

Was established in 1999, they comprise the finance ministers and central bank governors of the 19 largest economies in the world, plus representatives from the Europian Union and the European Central Bank.

Question 11

International trade

Answer 11

This occurs when a firm exports goods or services to consumers in another country.

Question 12

Foreign direct investment (FDI)

Answer 12

This occurs when a firm invests resources in business activities outside its home country.

Question 13

Role of technological change

Answer 13

The lowering of trade barriers made globalization of markets and productions a theoretical possibility. Technological change has made it a tangible reality.

Question 14

Moore´s law

Answer 14

This predicts that the power of microprocessor technology doubles and its cost of production falls in half every 18 months.

Question 15

Stock of foreign direct investment (FDI)

Answer 15

This refers to the total cumulative value of foreign investments as a percentage of the country´s GDP.

Question 16

Multinational Enterprise (MNE)

Answer 16

Any business that has productive activities in two or more countries.

Question 17

International Business

Answer 17

Any firm that engages in international trade or investment.

Question 18

Offshoring

Answer 18

Offshoring is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting.

Question 19

Outsourcing

Answer 19

Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.