ECONOMICS (X)-LESSON-4 GLOBALISATION AND THE INDIAN ECONOMY (QUESTION ANSWERS)

 

ECONOMICS (X)-LESSON-4

GLOBALISATION AND THE INDIAN ECONOMY

(QUESTION ANSWERS)

__________________________________________________________

(NCERT QUESTION ANSWERS)

1. What do you understand by globalisation? Explain in your own words.

Answer: Globalisation is defined as the integration between countries through foreign trade and foreign investments by multinational corporations (MNCs). Increase in foreign trade, migration of people from one country to another, the flow of capital finance from one country to another and private and public investments from foreign countries all together contribute to globalisation.

2. What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Answer: The main reason for putting barriers to foreign trade and foreign investment by the Indian government was to protect the interest earned by producers and small industrialists of our country from foreign competition.

But later it was accepted by the government that foreign competition would encourage Indian industrialists to improve the quality of their products and removing these barriers would increase trade and quality of products produced in the country.

3. How would flexibility in labour laws help companies?

Answer: Flexibility in labour law helps companies because it helps to attract foreign investments. Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work. This is done to reduce the cost of labour for the company. However, still not satisfied, foreign companies are demanding more flexibility in labour laws. The competition in the market is increasing each day, and if the Government does not allow flexibility with these laws, the foreign companies will not be able to reach their desired profit levels.

4. What are the various ways in which MNCs set up, or control, production in other countries?

Answer: MNCs set up and control production by investing a huge amount of money in a country’s economy. It sets up production units close to the market so that they get cheaper labour. To increase production, MNCs collaborate with some local companies as the production rate would rapidly increase. In most of the cases, the MNCs buy local companies and expand their production. The other way in which they control production is by placing the orders for production with small and local producers. They help production using technology and heavy machinery, which makes the work more efficient and productive.

5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Answer: Developed countries want developing countries to liberalise their trade and investment because MNCs can set up industries in small and developing nations, which are less expensive and can earn them more profit. The labour cost decreases the manufacturing cost, and these decreases in cost results in an increase in profit. Also setting up factories and industries in developed countries increases competition. The developing countries should, in turn, ask for a fair removal of trade barriers in order to protect their own industries.

6. “The impact of globalisation has not been uniform.” Explain this statement.

Answer: The impact of globalisation has not been uniform because only the developed countries have gained profits due to globalisation. The developing countries are only a source of setting industries and getting cheaper labour, and the entire profits are earned by the developed countries. The small industries and companies in developing countries have constantly been facing challenges in terms of earning profits and brings their goods in the market.

7. How has liberalisation of trade and investment policies helped the globalisation process?

Answer: The liberalisation of trade and investment policies helped the globalisation process because it has helped in the removal of trade barriers. It has made foreign trade and investment easier. The choices of the buyers have also expanded, as now they get to choose products manufactured by not only domestic companies but also by the foreign companies. Competition among traders has resulted in the cheaper price of products. Liberalisation has spread globalisation as the decision-making power of export and import now lies with the businessmen themselves.

8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Answer: Foreign trade has led to the integration of markets across the countries. Because of foreign trade, the producers are now able to compete and export their goods to the markets of other countries. Opportunities are provided not just for the seller but also for the buyer to get goods outside their own country. Their choices have expanded as now they get to choose products manufactured by not only domestic companies but also by the foreign companies.

The price of these goods has decreased because of the competition in the market. Producers from different countries are now able to compete not just with the competitors in their own country, but with across the world. The Indian market today is not flooded with goods made in India but goods from all across the world at an affordable price.

9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Answer: Globalisation will continue in the future as well. Twenty years from now, the production of goods will be more efficient, competition in the market will increase, advancement in every field will be evident and the quality and quantity of goods produced will also increase. Small industries and entrepreneurs will increase as more opportunities will be provided to them.

10. Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?

Answer: Globalisation has its pros and cons, and there are various advantages and disadvantages of the increasing globalisation in the country. The advantages of increased globalisation include improved trade opportunities and the increase in the number of employed because of small scale industries. The profit market has increased, and the increase in imports and exports has increased the economy of the nation. People can buy goods that are made across the world at cheaper prices.

The disadvantages of globalisation include that globalisation has increased the income of the rich and has decreased the income of the poor because the small scale local industrialists are unable to earn much profit. Thereby increasing income inequality.

11. Fill in the blanks.

Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of ______________. Markets in India are selling goods produced in many other countries. This means there is increasing ______________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because _____________ ___________________________________________ . While consumers have more choices in the market, the effect of rising _______________ and ______________has meant greater _________________among the producers.

Answer:

Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India Because of the cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

12. Match the following.

(i) MNCs buy at cheap rates from small	(a) Automobiles producers
(ii) Quotas and taxes on imports are used to regulate trade items	(b) Garments, footwear, sports
(iii) Indian companies who have invested abroad	(c) Call centres
(iv) IT has helped in spreading of production of services	(d) Tata Motors, Infosys, Ranbaxy
(v) Several MNCs have invested in setting up factories in India for production	(e) Trade barriers

Answer:

(i) MNCs buy at cheap rates from small producers	(b) Garments, footwear, sports items
(ii) Quotas and taxes on imports are used to regulate trade	(e) Trade barriers
(iii) Indian companies who have invested abroad	(d) Tata Motors, Infosys, Ranbaxy
(iv) IT has helped in spreading of production of services	(c) Call centres
(v) Several MNCs have invested in setting up factories in India for production	(a) Automobiles producers

13. Choose the most appropriate option.

1. The past two decades of globalisation has seen rapid movements in

a.    goods, services and people between countries.

b.    goods, services and investments between countries.

c.    goods, investments and people between countries.

Answer: c. goods, services and investments between countries

2. The most common route for investments by MNCs in countries around the world is to

a.    set up new factories.

b.    buy existing local companies.

c.    form partnerships with local companies.

Answer: c. buy existing local companies

3. Globalisation has led to improvement in living conditions

a.    of all the people

b.    of people in developed countries

c.    of workers in the developing countries

d.    none of the above

Answer: d. none of the above

 

OTHER IMPORTANT QUESTIONS

1. Cargill foods is the largest producer of which of the following in India? [Delhi, 2012]
(a) Medicines
(b) Asian Paints
(c) Edible oil
(d) Garments

2. W.T.O. was started at the initiative of which one of the following group of countries? [Delhi, 2012]
(a) Rich countries
(b) Poor countries
(c) Developed countries
(d) Developing countries

3. Which one of the following organisations lays stress on liberalisation of foreign trade and foreign investment? [Delhi, 2012]
(a) International Labour Organisation
(b) International Monetary Fund
(c) World Health Organisation
(d) World Trade Organisation

4. Which one of the following is not characteristic of ‘Special Economic Zone’? [AI, 2012]
(a) They do not have to pay taxes for long period.
(b) Government has allowed flexibility in labour laws.
(c) They have world-class facilities.
(d) They do not have to pay taxes for an initial period of five years.

5. Which one of the following Indian industries has been hit hard by globalisation? [AI, 2012]
(a) IT
(b) Toymaking
(c) Jute
(d) Cement

6. Which one of the following type of countries has been more benefited from globalisation? [AI, 2012]
(a) Rich countries
(b) Poor countries
(c) Developing countries
(d) Developed countries

7. Removing barriers or restrictions set by the government is called: [CBSE (CCE) 2012]
(a) Liberalisation
(b) Investment
(c) Fovourable trade
(d) Free trade

8. Investment made by MNCs are termed as: [CBSE (CCE)2012]
(a) Indigenous investment
(b) Foreign investment
(c) Entrepreneur’s investment
(d) None of the above

9. What is the process of rapid integration or interconnection between countries called? [CBSE (CCE) 2012]
(a) Industrialization
(b) Globalization
(c) Liberalization
(d) Privatization

10. Which one of the following is an example of a trade barrier? 
(a) Tax on Exports
(b) Tax on Imports
(c) Free Trade
(d) Restriction on Export

11. Removal of barriers set by the government is known as 
(a) Globalisation
(b) Liberalisation
(c) Industralisation
(d) Privatisation

12. Globalisation does NOT involve which one of the following? 
(a) Rapid integration between countries.
(b) More goods and services moving between countries.
(c) Increased taxes on imports.
(d) Movement of people between countries for jobs, education etc.

13. Which of the following is not a feature of a Multi-National Company? 
(a) It owns/controls production in more than one nation.
(b) It sets up factories where it is close to the markets.
(c) It organises production in complex ways.
(d) It employs labour only from its own country.

14. Liberalisation involves which one of the following? 
(a) Removal of trade barriers
(b) Increasing subsidy on fertilisers
(c) Increasing import duties on goods
(d) Increasing export duties on goods

15. The past two decades of globalisation has seen rapid movements in
(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investments and people between countries.

16. The most common route for investments by MNCs in countries around the world is to
(a) set up new factories.
(b) buy existing local companies.
(c) form partnerships with local companies.

17. Globalisation has led to an improvement in living conditions
(a) of all the people
(b) of people in developed countries
(c) of workers in the developing countries
(d) none of the above.

18. Globalisation, by connecting countries, shall result in
(a) lesser competition among producers.
(b) greater competition among producers.
(c) no change in competition among producers.

19. Company that owns or controls production in more than one nation
(a) Foreign companies
(b) Government companies
(c) Multinational companies
(d) Private companies

20 Investment made by MNCs is called
(a) Mutual investment
(b) Inter-government investment
(c) Portfolio Investment
(d) Foreign investment

21. Benefit to the local company of joint production with MNCs is
(i) Money from MNCs for additional investments
(ii) Moral and Social support
(iii) Latest technology for production
(iv) All of them
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (iii) and (iv)
(d) (i) and (iii)

22. Cargill Foods, a very large American MNC, has bought over smaller Indian companies such as
(a) Parakh Foods
(b) Amul
(c) Britannia
(d) None of the above

23. Cargill is now the largest producer of edible oil in India, with a capacity to make ………… pouches daily.
(a) 6 million
(b) 5 million
(c) 4 million
(d) 55 million

24. Examples of industries where production is carried out by a large number of small producers around the world
(a) Garments
(b) Footwear
(c) Sport items
(d) All of them

25. Ford motors came to India in
(a) 1996
(b) 1995
(c) 1994
(d) 1990

26. Effect of Chinese toys on Indian toymakers is
(a) No effect
(b) Making profits
(c) Suffering losses
(d) None of them

27. Rapid integration or interconnection between countries is known as
(a) Privatisation
(b) Globalisation
(c) Liberalisation
(d) Socialisation

28. Post 50 years have seen several improvements in
(a) Transportation technology
(b) Information technology
(c) Communication technology
(d) All of them

29. Tax on imports is an example of
(a) Terms of Trade
(b) Collateral
(c) Trade Barriers
(d) Foreign Trade

3B Removing barriers or restrictions set by the government is known as
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Socialisation

31. Around which year, need for removing barriers on foreign trade and foreign investment in India was felt ?
(a) 1990
(b) 1991
(c) 1992
(d) 2000
32. ……………. is one such organisation whose aim is to liberalise international trade
(a) UNICEF
(b) World Bank
(c) WTO
(d) IDBI

33. Till 2006, how many members were there in WTO?
(a) 139
(b) 150
(c) 101
(d) 149

34. Companies who set up production units in the Special Economic Zones (SEZs) do not have to pay taxes for an initial period of
(a) 2 years
(b) 5 years
(c) 4 years
(d) 10 years

35. Industries where small manufacturers have been hit hard due to competition.
(a) Batteries
(b) Tyres
(c) Dairy Products
(d) All of them

36. Number of workers that small industries in India employ
(a) 18 million
(b) 19 million
(c) 20 million
(d) 21 million

37. To get large orders, Indian exporters try hard to cut their own costs by
(a) Reducing cost of raw materials
(b) Reducing advertising and marketing cost
(c) Reducing electricity cost
(d) Cutting labour cost

38. To achieve the goal of fair globalisation, a major role can be played by
(i) People
(ii) Government
(iii) MNCs
(iv) None of the above
(a) (i) and (iii)
(b) (ii) and (iv)
(c) (i) and (ii)
(d) (iii) and (iv)

39. It refers to globalisation which creates opportunities for all and ensures that its benefits are better shared.
(a) Privatisation
(b) Special Economic Zones (SEZ)
(c) WTO
(d) Fair globalisation

40. Allowing private sector to set up more and more of such industries as were previously reserved for the public sector.
(a) Globalisation
(b) Privatisation
(c) Liberalisation
(d) Socialisation

ANSWERS-MCQS

1	2	3	4	5	6	7	8	9	10
C	C	D	A	B	D	A	B	B	B
11	12	13	14	15	16	17	18	19	20
B	C	D	A	A	B	C	B	C	D
21	2	23	24	25	26	27	28	29	30
A	B	D	B	C	C	B	D	C	B
31	32	33	34	35	36	37	38	39	40
B	C	B	B	D	C	D	C	D	B