A concern voiced by critics of globalization is that today's increasingly interdependent global

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1 1 Globalization is criticized because it increases the power of. A. governments to own enterprises B. unskilled labor to form labor unions C. supranational organizations over nation-states D. nation-states to regulate markets and reduce competition A concern voiced by critics of globalization is that today's increasingly interdependent global economy shifts economic power away from national governments and toward supranational organizations such as the World Trade Organization, the European Union, and the United Nations. 2. An international business, unlike a multinational enterprise,. A. needs to have manufacturing units in at least two foreign nations B. needs to manufacture products or provide services that target a global market C. need not customize its products to the requirements of national markets D. need not invest directly in operations in other countries An international business is any firm that engages in international trade or investment. A firm does not have to become a multinational enterprise, investing directly in operations in other countries, to engage in international business, although multinational enterprises are international businesses. 3. What is the main reason that managing an international business differs from managing a domestic business? A. Because international managers are more experienced. B. Because countries differ in their cultures and systems. C. Because countries want to do business with their neighbors. D. Because countries want to keep their transactions simple. As their organizations increasingly engage in cross-border trade and investment, managers

2 need to recognize that the task of managing an international business differs from that of managing a purely domestic business in many ways. At the most fundamental level, the differences arise from the simple fact that countries are different. 4. Interdependent political, economic, and legal systems of a country make up its: A. administrative agenda. B. socioeconomic fabric. C. cultural environment. D. political economy. The term political economy is used to stress that the political, economic, and legal systems of a country are interdependent; they interact and influence each other, and in doing so they affect the level of economic well-being. 5. A political system that prioritizes the needs of the society over individual freedoms is called. A. totalitarianism B. collectivism C. capitalism D. egalitarianism Collectivism refers to a political system that stresses the primacy of collective goals over individual goals. When collectivism is emphasized, the needs of society as a whole are generally viewed as being more important than individual freedoms. 5. In several Western democracies, the poor performance of state-owned enterprises, because of protection from competition and guaranteed government financial support, led to. A. privatization

3 B. nationalization C. liberalization D. socialization of production In many countries, state-owned companies performed poorly. As a consequence, a number of Western democracies voted many Social Democratic parties out of office in the late 1970s and early 1980s. They were succeeded by political parties, such as Britain's Conservative Party and Germany's Christian Democratic Party, that were more committed to free market economics. These parties sold state-owned enterprises to private investors (a process referred to as privatization). 6 Paralleling the spread of democracy, since the 1980s there has been the transformation from: A. free-market economies to socialist economies. B. mixed economies to collectivist economies. C. open economies to closed economies. D. command economies to market-based economies. Paralleling the spread of democracy since the 1980s has been the transformation from centrally planned command economies to market-based economies. More than 30 countries that were in the former Soviet Union or the Eastern European Communist bloc have changed their economic systems. 7 Which of the following is a step in the shift toward a market-based economic system? A. Increasing trade barriers B. Increasing price controls C. Nationalization D. Creation of a legal system to safeguard property rights The shift toward a market-based economic system often entails a number of steps: deregulation, privatization, and creation of a legal system to safeguard

4 property rights. 8. The benefits of doing business in a country are a function of all of the following EXCEPT: A. the size of the market. B. its present wealth. C. its past growth. D. its future growth prospects. In the most general sense, the long-run monetary benefits of doing business in a country are a function of the size of the market, the present wealth of consumers in that market, and the likely future wealth of consumers. 9. What is the World Trade Organization? What is its role in the world economy? The World Trade Organization (WTO) is primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO members. The WTO currently has 148 members that collectively account for 97 percent of world trade. The WTO has been instrumental in lowering barriers to cross-border trade and investment. In addition to these responsibilities, the WTO also facilitates the establishment of

5 additional agreements between member states. 10. How do countries with representative democracies ensure that their elected officials are held responsible for their actions? To guarantee that elected representatives are being held accountable for their actions by the electorate, an ideal representative democracy incorporates safeguards that are enshrined in constitutional law. These safeguards include an individual's right to freedom of expression, opinion, and organization; a free media; regular elections in which all eligible citizens are allowed to vote; universal adult suffrage; limited terms for elected representatives; a fair court system that is separate for the political system; a nonpolitical state bureaucracy; a nonpolitical police force and armed service; and relatively free access to state information. 11. Explain how geography of a nation influences its economic development. The influential Harvard University economist Jeffrey Sachs argues that by virtue of favorable geography, certain societies are more likely to engage in trade than others and are thus more likely to be open to and develop market-based economic systems, which in turn promotes faster economic growth. He also argues that, irrespective of the economic and political institutions a country adopts, adverse geographical conditions, such as the high rate of disease, poor soils, and hostile climate that afflict many tropical countries, can have a negative impact on development.