Globalisation and the Indian Economy — Questions & Answers

Sample questions from Globalisation and the Indian Economy

1. Q1. Which definition of a multinational corporation matches the one the chapter gives?

   • A.A company that exports its goods to more than one country
   • B.A company that has shareholders in more than one country
   • C.A company set up by an agreement between two governments
   • D.A company that owns or controls production in more than one nation✓
   Solution

   D is correct. A multinational owns or controls production in more than one nation. A describes an exporter, and the chapter is careful that selling abroad is foreign trade, not multinational production. B describes foreign shareholding, which does not by itself place production abroad. C describes an intergovernmental body such as the WTO, not a company.

2. Q2. The removal or reduction of government restrictions on trade and investment is called:

   • A.Liberalisation✓
   • B.Trade barrier
   • C.Nationalisation
   • D.Isolation
   Solution

   Liberalisation is the removal or reduction of the restrictions or barriers set by the government on foreign trade and investment; it allows goods, services and investment to move more freely and has promoted globalisation.

3. Q3. A Multinational Corporation (MNC) is a company that:

   • A.Works only in its home country
   • B.Owns or controls production in more than one country✓
   • C.Only exports goods
   • D.Is owned by the government
   Solution

   A Multinational Corporation is a company that owns or controls production in more than one country; it sets up offices and factories in regions where it can get cheap labour and other resources to earn greater profits.

4. Q4. Why did the Indian government put barriers on foreign trade and investment after independence?

   • A.To harm Indian industry
   • B.To protect domestic producers from foreign competition while they grew✓
   • C.To stop all Indian industries
   • D.To help only foreign companies
   Solution

   After independence, the Indian government put barriers on foreign trade and investment to protect domestic producers, especially the newly emerging industries, from foreign competition, so that they could grow; these barriers were later reduced through liberalisation.

5. Q5. MNCs often set up production in a country mainly to take advantage of:

   • A.High wages
   • B.Cheap labour and other resources✓
   • C.A lack of markets
   • D.Poor transport
   Solution

   MNCs set up production close to markets, or where there is cheap labour and other resources, so that they can produce at low cost and earn greater profits.

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