Chapter 1—Globalizing Business
TRUE/FALSE
1. A multinational enterprise is a firm that engages in foreign direct investment by directly
managing value-added activities in other countries.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 4 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
2. The term “emerging markets” refers to all markets other than the developed markets.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governments operating in an economy.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
4. Majority of the global GDP is contributed by the emerging markets.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
, KEY: Bloom's: Knowledge
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods
and services different currencies can purchase.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
6. Purchasing power parity (PPP) is calculated as the sum of value added by resident firms,
households, and governments operating in an economy.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
7. Emerging markets contribute about 26% of global GDP without adjusting for purchasing power
parity (PPP).
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 7 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
8. More than half the GDP produced by emerging markets comes from outside the BRIC countries.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 7 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Western Europe, and Japan.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
11. The second tier of the global economic pyramid is made up of countries with a per capita annual
income of more than $20,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
12. The emerging markets of the world are placed at the top of the global economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
13. The global economic pyramid does not represent countries that have a per capita annual income
of less than $2,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
, REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
14. The term "base of the pyramid" represents economies where individuals make less than $2,000 a
year.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
15. Reverse innovations are innovations that are adopted first in the Triad-based multinationals and
then diffused around the world.
ANS: F PTS: 1 DIF: Difficulty: Moderate
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
16. Reverse innovation is an example of bottom up innovation.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 10 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
17. The Group of 20 includes the European Union (EU)—a regional bloc.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 11 OBJ: LO: 1-2 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
TRUE/FALSE
1. A multinational enterprise is a firm that engages in foreign direct investment by directly
managing value-added activities in other countries.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 4 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
2. The term “emerging markets” refers to all markets other than the developed markets.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
3. Gross domestic product (GDP) is the sum of value added by resident firms, households, and
governments operating in an economy.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
4. Majority of the global GDP is contributed by the emerging markets.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
, KEY: Bloom's: Knowledge
5. Purchasing power parity (PPP) is a conversion that determines the equivalent amount of goods
and services different currencies can purchase.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
6. Purchasing power parity (PPP) is calculated as the sum of value added by resident firms,
households, and governments operating in an economy.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 5 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
7. Emerging markets contribute about 26% of global GDP without adjusting for purchasing power
parity (PPP).
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 7 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
8. More than half the GDP produced by emerging markets comes from outside the BRIC countries.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 7 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
, 9. On the global economic pyramid, the Triad refers to developed economies consisting of North
America, Western Europe, and Japan.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
10. All the countries of the BRIC belong to the top tier of the global economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
11. The second tier of the global economic pyramid is made up of countries with a per capita annual
income of more than $20,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
12. The emerging markets of the world are placed at the top of the global economic pyramid.
ANS: F PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
13. The global economic pyramid does not represent countries that have a per capita annual income
of less than $2,000.
ANS: F PTS: 1 DIF: Difficulty: Easy
, REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
14. The term "base of the pyramid" represents economies where individuals make less than $2,000 a
year.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
15. Reverse innovations are innovations that are adopted first in the Triad-based multinationals and
then diffused around the world.
ANS: F PTS: 1 DIF: Difficulty: Moderate
REF: p. 9 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
16. Reverse innovation is an example of bottom up innovation.
ANS: T PTS: 1 DIF: Difficulty: Moderate
REF: p. 10 OBJ: LO: 1-1 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
17. The Group of 20 includes the European Union (EU)—a regional bloc.
ANS: T PTS: 1 DIF: Difficulty: Easy
REF: p. 11 OBJ: LO: 1-2 NAT: BUSPROG: Analytic
KEY: Bloom's: Knowledge
