7.7 Changes as a Result of the World Economy

• Companies may relocate production to reduce costs
• Countries specialize in their comparative advantages
• What is outsourcing and offshoring used for by companies?

  Reduce costs
• What does trade liberalization involve?

  Reducing barriers to trade
• What is one positive effect of increased competition due to trade liberalization?

  Innovation and efficiency
• What is the primary role of international financial institutions?

  Providing financial assistance
• Policies imposed by international financial institutions have been criticized for negatively impacting local communities and the environment.


  True
• Match the factor contributing to the rise of MNCs with its description:

  Technological Advancements ↔️ Improved communication and transportation

  Trade Liberalization ↔️ Reduced tariffs and trade barriers

  Seeking Lower Costs ↔️ Relocating production to countries with cheaper resources

  Expanding Markets ↔️ Accessing new consumer bases in different countries
• Increased competition due to trade liberalization drives innovation and productivity.


  True
• Increased competition from globalization drives innovation and productivity.

  True
• International financial institutions help developing countries access capital
• Globalization can lead to the displacement of local jobs
• Match the environmental concern with its associated international agreement:

  Pollution ↔️ Basel Convention

  Climate Change ↔️ Paris Agreement

  Biodiversity Loss ↔️ CITES
• Investment in innovation can help countries compete globally in new industries.


  True
• What does globalization refer to?

  Interconnectedness of economies
• What must countries and companies compete for in the global economy?

  Markets, resources, talent
• MNCs can lead to environmental damage in less developed countries

  True
• Greater economic integration results from increased trade
• Global supply chains are a result of trade liberalization.

  True
• Trade liberalization creates both opportunities and challenges for workers and businesses.


  True
• International financial institutions help developing countries access capital
• Globalization can lead to job creation and job displacement
• Global supply chains lower costs and improve efficiency
• What is the effect of global supply chains on production costs?

  Lower costs
• What is one way international financial institutions facilitate globalization?

  Promoting free trade
• What is one opportunity for developing economies from globalization?

  Increased foreign investment
• Globalization can lead to increased income inequality within developing countries.

  True
• Workforce retraining helps workers adapt to new job requirements
• Trade agreements aim to open new markets
• Global supply chains involve production in multiple countries before final assembly


  True
• Match the factor with its description:

  Technological advancements ↔️ Improve communication and transportation

  Trade liberalization ↔️ Reduced tariffs and barriers

  Seeking lower costs ↔️ Relocate production to cheaper areas

  Expanding markets ↔️ Increase revenue and customer base
• Order the effects of trade liberalization:

  1️⃣ Reduction of trade barriers

  2️⃣ Increased trade and investment

  3️⃣ Emergence of global supply chains

  4️⃣ Increased competition
• Trade liberalization leads to increased economic integration
• Trade liberalization encourages countries to specialize in their comparative advantages
• Match the international financial institution with its role:

  World Bank ↔️ Reduces poverty and promotes economic development

  IMF ↔️ Monitors global financial stability

  Regional Development Banks ↔️ Supports regional economic and social development
• What is the key characteristic of globalization?

  Interconnectedness and interdependence
• Name three examples of multinational corporations.

  Toyota, Coca-Cola, McDonald's
• Increased trade and investment lead to economic growth
• Match the international financial institution with its primary role:

  World Bank ↔️ Reduces poverty in developing countries

  IMF ↔️ Monitors global financial stability

  Regional Development Banks ↔️ Supports regional economic development
• International financial institutions have been criticized for imposing austerity measures that can harm local communities.


  True