FVC1 study guide questions and
answers(A+ guide)
What are the characteristics of globalization? Answer- - Communication
- transportation
- trans-national businesses
- free trade agreements
- consumer culture
- labor force.
How do major international institutions facilitate globalization? Answer- - major
international institutions facilitate globalization by creating an international monetary
system. Examples include:
- International monetary funds (IMF): provides financial stability through oversight of
international monetary system, exchange rate stability, and loans to correct BoP
(balance of payment) issues.
- World bank: reconstruction and restructuring economies as an opportunity to reach
global solutions to national challenges. Promotes FDI.
- World trade Organization: focuses on lowering/removing trade barriers in order to
promote free-trade and fair competition in the market (evolved from GATT)
What are key policy measures that make globalization sustainable? Answer- - Countries
with sound economic policies will be more successful in the global economy
- Encourage open economies and cross border integration
- Governments should put in place good governance, competitive markets, and property
rights, and assist in the fight against corruption (transparency).
What are ways that technology bridges the global divide? Answer- - Lowers costs to
obtain internet access
- Allowing underdeveloped countries to utilize the internet and the advantages of
technology lessening the digital divide
What is the rationale of specific anti-globalization arguments? Answer- Globalization
can cause disruptive economic changes including:
, - Job losses
- Stagnant wages
- Loss of local control over economic policies and developments
- Disappearance of old industries, and related erosion of communities
What are the benefits of trade? Answer- trade benefits consumers in three major ways:
- A greater amount of choice in the availability of goods and services;
- Lower prices for goods and services consumed; and
- Higher living standards.
Trade has influenced culture, shaped history, raised living standards, and expanded
knowledge to include new ways of thinking.
What are the benefits of foreign investment? Answer- - Brings funds and business
culture from abroad
- creates new well-paying jobs
- introduces innovative technologies, and enhances the skills of domestic workers.
- Because of the largely positive impact that FDI has on countries, governments all over
the world try to create a business-friendly environment to attract such investments.
What are the major international trade theories and what are key features of each one?
Answer- - mercantilism: the value of exports must always exceed those of imports so
that the country would have a trade surplus.
- absolute advantage: when one producer can produce more of a good than another
with the same amount of resources
- comparative advantage: the concept that, even if a state does not have an absolute
advantage in the production of any good, a state will still benefit if it specializes in the
production of those goods that it can produce at a lower opportunity cost
- Heckscher-Ohlin theory: a model intended to explain the content and direction of trade
flows. It expects each country to export goods that intensively use the locally most
abundant factors and to import goods whose production requires intensive use of locally
scare factors
- factor-price equalization theory: states that when factors (labor, for example) are
allowed to move freely among trading nations, efficiency increases, which leads to
superior allocation of production of goods and services among countries.
answers(A+ guide)
What are the characteristics of globalization? Answer- - Communication
- transportation
- trans-national businesses
- free trade agreements
- consumer culture
- labor force.
How do major international institutions facilitate globalization? Answer- - major
international institutions facilitate globalization by creating an international monetary
system. Examples include:
- International monetary funds (IMF): provides financial stability through oversight of
international monetary system, exchange rate stability, and loans to correct BoP
(balance of payment) issues.
- World bank: reconstruction and restructuring economies as an opportunity to reach
global solutions to national challenges. Promotes FDI.
- World trade Organization: focuses on lowering/removing trade barriers in order to
promote free-trade and fair competition in the market (evolved from GATT)
What are key policy measures that make globalization sustainable? Answer- - Countries
with sound economic policies will be more successful in the global economy
- Encourage open economies and cross border integration
- Governments should put in place good governance, competitive markets, and property
rights, and assist in the fight against corruption (transparency).
What are ways that technology bridges the global divide? Answer- - Lowers costs to
obtain internet access
- Allowing underdeveloped countries to utilize the internet and the advantages of
technology lessening the digital divide
What is the rationale of specific anti-globalization arguments? Answer- Globalization
can cause disruptive economic changes including:
, - Job losses
- Stagnant wages
- Loss of local control over economic policies and developments
- Disappearance of old industries, and related erosion of communities
What are the benefits of trade? Answer- trade benefits consumers in three major ways:
- A greater amount of choice in the availability of goods and services;
- Lower prices for goods and services consumed; and
- Higher living standards.
Trade has influenced culture, shaped history, raised living standards, and expanded
knowledge to include new ways of thinking.
What are the benefits of foreign investment? Answer- - Brings funds and business
culture from abroad
- creates new well-paying jobs
- introduces innovative technologies, and enhances the skills of domestic workers.
- Because of the largely positive impact that FDI has on countries, governments all over
the world try to create a business-friendly environment to attract such investments.
What are the major international trade theories and what are key features of each one?
Answer- - mercantilism: the value of exports must always exceed those of imports so
that the country would have a trade surplus.
- absolute advantage: when one producer can produce more of a good than another
with the same amount of resources
- comparative advantage: the concept that, even if a state does not have an absolute
advantage in the production of any good, a state will still benefit if it specializes in the
production of those goods that it can produce at a lower opportunity cost
- Heckscher-Ohlin theory: a model intended to explain the content and direction of trade
flows. It expects each country to export goods that intensively use the locally most
abundant factors and to import goods whose production requires intensive use of locally
scare factors
- factor-price equalization theory: states that when factors (labor, for example) are
allowed to move freely among trading nations, efficiency increases, which leads to
superior allocation of production of goods and services among countries.
