Consider a firm that has decided to move its factory from its home country to Na

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Consider a firm that has decided to move its factory from its home country to Nation X (a developing nation). Nation X has a large supply of laborers willing to work for $4 an hour and no laws governing environmental regulation. In its home country, the firm would have to pay workers $9 an hour and provide health and retirement benefits, and it would be legally required to comply with environmental regulations.
1. Which of the following represent common beliefs held by opponents of globalization regarding the firm's decision to relocate? Check all that apply.
A. On the job safety of workers in Nation X is likely to be ignored. B. The factory will pay wages that are below the current wage received by workers in Nation X. C. The increase in foreign investment will crowd out local investment opportunities in Nation X. D. The low cost labor in Nation X undercuts the workers previously employed in the factory's home country.
Below is a statement reflecting a belief held by opponents of globalization. Select the box below containing information that accurately supports or refutes the claim in quotation marks.
"Income inequality has increased in most globalized countries."
A. Income growth has been concentrated among the top earners in most developing countries. B. With the exception of China, the benefits of growth have been widespread among classes.
3. Suppose you are considering whether to invest in country A or country B. You know that both countries have fixed exchange rates, and that there is a much greater amount of short term money invested in country A than country B. Based on this information alone, country ___(B or A) appears to be a less risky place in which to invest.
4. True or false: a country with a fixed exchange rate is more at risk for crisis if its stock of international reserves has been falling than if it has been relatively constant.
5. One of the contributing factors to the global financial crisis of 2007-2008 was that banks offered home mortgages to customers with inadequate incomes or bad credit. Select which one contains information that accurately describes most economists' suggestion for avoiding this problem.
A. Banks could have not financed home purchases. B. Banks could have made loans to only creditworthy customers.

Consider a firm that has decided to move its factory from its home country to Nation X (a developing nation). Nation X has a large supply of laborers willing to work for $4 an hour and no laws governing environmental regulation. In its home country, the firm would have to pay workers $9 an hour and provide health and retirement benefits, and it would be legally required to comply with environmental regulations.
1. Which of the following represent common beliefs held by opponents of globalization regarding the firm's decision to relocate? Check all that apply.
A. On the job safety of workers in Nation X is likely to be ignored. B. The factory will pay wages that are below the current wage received by workers in Nation X. C. The increase in foreign investment will crowd out local investment opportunities in Nation X. D. The low cost labor in Nation X undercuts the workers previously employed in the factory's home country.
Below is a statement reflecting a belief held by opponents of globalization. Select the box below containing information that accurately supports or refutes the claim in quotation marks.
"Income inequality has increased in most globalized countries."
A. Income growth has been concentrated among the top earners in most developing countries. B. With the exception of China, the benefits of growth have been widespread among classes.
3. Suppose you are considering whether to invest in country A or country B. You know that both countries have fixed exchange rates, and that there is a much greater amount of short term money invested in country A than country B. Based on this information alone, country ___(B or A) appears to be a less risky place in which to invest.
4. True or false: a country with a fixed exchange rate is more at risk for crisis if its stock of international reserves has been falling than if it has been relatively constant.
5. One of the contributing factors to the global financial crisis of 2007-2008 was that banks offered home mortgages to customers with inadequate incomes or bad credit. Select which one contains information that accurately describes most economists' suggestion for avoiding this problem.
A. Banks could have not financed home purchases. B. Banks could have made loans to only creditworthy customers.


1. Which of the following represent common beliefs held by opponents of globalization regarding the firm's decision to relocate? Check all that apply.
A. On the job safety of workers in Nation X is likely to be ignored. B. The factory will pay wages that are below the current wage received by workers in Nation X. C. The increase in foreign investment will crowd out local investment opportunities in Nation X. D. The low cost labor in Nation X undercuts the workers previously employed in the factory's home country.
Below is a statement reflecting a belief held by opponents of globalization. Select the box below containing information that accurately supports or refutes the claim in quotation marks.
"Income inequality has increased in most globalized countries."
A. Income growth has been concentrated among the top earners in most developing countries. B. With the exception of China, the benefits of growth have been widespread among classes.
3. Suppose you are considering whether to invest in country A or country B. You know that both countries have fixed exchange rates, and that there is a much greater amount of short term money invested in country A than country B. Based on this information alone, country ___(B or A) appears to be a less risky place in which to invest.
4. True or false: a country with a fixed exchange rate is more at risk for crisis if its stock of international reserves has been falling than if it has been relatively constant.
5. One of the contributing factors to the global financial crisis of 2007-2008 was that banks offered home mortgages to customers with inadequate incomes or bad credit. Select which one contains information that accurately describes most economists' suggestion for avoiding this problem.
A. Banks could have not financed home purchases. B. Banks could have made loans to only creditworthy customers.

Explanation / Answer

1. C. The increase in foreign investment will crowd out local investment opportunities in Nation X.

D. The low cost labor in Nation X undercuts the workers previously employed in the factory's home country.

2. A. Income growth has been concentrated among the top earners in most developing countries.

3. COuntry A.

4. True.

5. B. Banks could have made loans to only creditworthy customers.

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