GSCM 311 MIDTERM EXAM QUESTIONS
AND CORRECT ANSWERS
\.globalization - ANSWERS✔-extension of MAKE or BUY decision BEYOND
NATIONAL BORDERS
- exchange of information, ideas, and goods FASTER across the globe
\.Pros of globalization - ANSWERS✔-- increased awareness of other cultures and
countries
- globalization encourages innovation
- INCOME of low cost labor in developing countries has increased
- developing countries have increased access to first-world products
\.Cons of globalization - ANSWERS✔-- unequal opportunities across the world
- world's wealth is increasingly concentrated
- globalization strategy is poorly managed (damage of environment)
\.What did Adam Smith do? - ANSWERS✔-wrote The Wealth of Nations
\.absolute advantage - ANSWERS✔-party can produce a good or service more
efficiently than its competitors
, \.comparative advantage - ANSWERS✔-producing goods and service at lower
opportunity cost
\.mercantilism - ANSWERS✔-countries controlling trade so they export more than
they import
\.Thomas Friedman said... - ANSWERS✔-world has moved from periods of being
round (trade barriers high) to periods of being flat (where barriers to trade are
lowered)
\.Bretton Wood System - ANSWERS✔-- foundation of majority of world trade since
1944
- created financial and commodity interdependence
- US dollar as main trading currency
- TARIFFS reduced or eliminated
- free MOVEMENT between involved countries
\.European Union - ANSWERS✔-- most famous trading bloc
- non-tariff barriers to trade have been removed by member nations
- 27 members
- inspired by open borders trading between Belgium, Netherland, Luxembourg
\.African Continental Free Trade Agreement - ANSWERS✔-- remove tariffs from
90% of its goods initially, will eventually allow free access to 97% of goods
AND CORRECT ANSWERS
\.globalization - ANSWERS✔-extension of MAKE or BUY decision BEYOND
NATIONAL BORDERS
- exchange of information, ideas, and goods FASTER across the globe
\.Pros of globalization - ANSWERS✔-- increased awareness of other cultures and
countries
- globalization encourages innovation
- INCOME of low cost labor in developing countries has increased
- developing countries have increased access to first-world products
\.Cons of globalization - ANSWERS✔-- unequal opportunities across the world
- world's wealth is increasingly concentrated
- globalization strategy is poorly managed (damage of environment)
\.What did Adam Smith do? - ANSWERS✔-wrote The Wealth of Nations
\.absolute advantage - ANSWERS✔-party can produce a good or service more
efficiently than its competitors
, \.comparative advantage - ANSWERS✔-producing goods and service at lower
opportunity cost
\.mercantilism - ANSWERS✔-countries controlling trade so they export more than
they import
\.Thomas Friedman said... - ANSWERS✔-world has moved from periods of being
round (trade barriers high) to periods of being flat (where barriers to trade are
lowered)
\.Bretton Wood System - ANSWERS✔-- foundation of majority of world trade since
1944
- created financial and commodity interdependence
- US dollar as main trading currency
- TARIFFS reduced or eliminated
- free MOVEMENT between involved countries
\.European Union - ANSWERS✔-- most famous trading bloc
- non-tariff barriers to trade have been removed by member nations
- 27 members
- inspired by open borders trading between Belgium, Netherland, Luxembourg
\.African Continental Free Trade Agreement - ANSWERS✔-- remove tariffs from
90% of its goods initially, will eventually allow free access to 97% of goods
