Lesson – 4
                   Globalization and the Indian                                 Economy.

MCQ

1. MNC stands for(i) Multinational Corporation (ii) Multination Corporation(iii) Multinational Cities (iv) Multinational Council

2. Investment made by MNCs is called(i) Investment (ii) Foreign Trade(iii) Foreign Investment (iv) Disinvestment

3. Process of integration of different countries is called(i) Liberalisation (ii) Privatisation(iii) Globalisation (iv) None of the above

4. MNCs do not increase(i) Competition (ii) Price war (iii) Quality (iv) None of the above5. This helps to create an opportunity for the producers to reach beyond the domestic market(i) Foreign trade (ii) Domestic trade (iii) Internal trade (iv)Trade barrier

6. Foreign Trade(i) Increases choice of goods (ii) Decreases prices of goods(iii) Increases competition in the market (iv) Decreases earnings

7. Globalisation was stimulated by(i) Money (ii) Transportation (iii) Population (iv) Computers

8. Production of services across countries has been facilitated by(i) Money (ii) Machine (iii) Labour (iv) Information and communication technology

9. Tax on imports is an example of(i) Investment (ii) Disinvestment (iii) Trade barrier (iv) Privatisation

10. Liberalisation does not include(i) Removing trade barriers (ii) Liberal policies(iii) Introducing quota system (iv) Disinvestment


SHORT TYPE QUESTION ANSWERS


Q.1 Write four functions of WTO.Ans. Four functions of WTO are:(i) Administering trade agreements between nations. (ii) Forum for trade negotiations.(iii) Handling trade disputes. (iv) Maintaining national trade policy.


Q.2 What is the impact of WTO on Indian economy?Ans. The impact of WTO on Indian economy is:(i) An opportunity to India for trading with other member countries.(ii) Availability of foreign technology to India at a reduced cost.
(iii) Many laws of WTO are unfavorable to the developing countries like India.(iv) Certain clauses of WTO agreement on agriculture put restrictions on the provision of subsidized food grainsin India.


Q.3 What is trade barrier? How governments can use trade barriers?Ans. Any kind of restrictions imposed on trade is called a trade barrier.Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds ofgoods and how much of each, should come into the country.


Q. 4What is privatization and liberalization?Ans. Privatization means allowing the private sector to set up industries which were earlier reserved for the publicsector. Removing barriers or restrictions set by the government on trade is called liberalization. Thus, privatizationand liberalization results in freedom from closed and regulated economy.


Q. 5How MNCs can spread their production?Ans. MNCs can spread their production by:-1. Setting up joint production units with local companies.3. Placing orders with small producers


Q.6 Mention three factors responsible for globalization.Ans. (i) Growth of MNCs.(ii) Growth of technology.(iii) Development in transport and communication technology.


LONG TYPE QUESTION ANSWERS


Q.1What do you mean by Globalization? What are the effects of globalization in India?Ans. Globalization is the integration or interconnection between the countries through trade and foreigninvestments by multinational corporations (MNCs).Positive impacts:-1) Greater choice and improved quality of goods at competitive price and hence raises standard of living.2) MNCs have increased investments in India.3) Top Indian companies emerged as multinationals.4) Created new opportunities for companies providing services like IT sector.5) Collaborations with foreign companies help a lot to domestic entrepreneurs.Negative impacts:-1) Indian Economy faced the problem of brain drain.2) Globalization has failed to mark its impact on unemployment and poverty.3) Cut in farm subsidies.4) Closure of small industries.


Q.2 What is WTO? What are the aims of WTO? What are the drawbacks of WTO?Ans. WTO is World trade organization. It is an organization which is in favour of increasing the world tradethrough globalization.The aims of WTO are:(i) To liberalise international trade by allowing free trade for all.(ii) To promote international trade among the countries of the world in an open uniform and nondiscriminatorymanner.
(iii) Removal of both the import and export restrictions.The drawbacks of WTO are:1) WTO is dominated by the developed country2) WTO is used by developed countries to support globalization in areas that are not directly related to trade.3) Though WTO is supposed to allow free trade for all, in practice, it is seen that the developed countries haveunfairly retained trade barriers.


Q.3 What are MNCs? How the MNCs functions? What are the main guiding factors of MNCs?Ans. MNCs are Multinational corporations. It is a company that owns or controls production in more than oneNation. MNCs set up offices and factories for production in region where they can get cheap labour andother resources, closer to the markets. This is done to reduce the cost of production and the MNCs canearn greater profits. MNCs not only sell its finished products globally but also the goods and services areproduced globally. The production process is divided into small parts and spread across the globe.The main guiding factors of MNCs are:(i) Cheap production(ii) Closeness of production unit to the markets.(iii) Favourable government policies.


Q.4 What are the ways through which MNCs spread their production and interact with local producers?Ans. There are a variety of ways in which MNCs spread their production and interact with local producers invarious countries across the globe.(i) Setting up partnerships with local companies,(ii) Using the local companies for supplies(iii) Closely competing with the local companies or buying them up,(iv) MNCs are exerting a strong influence on production at these distant locations so that they couldproduce at cheapest price and earn profit.
Answer Key of MCQ:

1(i) 2(iii) 3(iii) 4(iv) 5(i) 6(iv)7(ii) 8(iv) 9(iii) 10(iii)