Chapter 4 — Globalisation and the Indian Economy – Question Bank
A. MCQs — Multiple Choice Questions
1. Which statement best describes globalisation?
A. Complete removal of domestic industries
B. Increasing integration of countries through trade, investment and other connections
C. Restriction of foreign goods
D. Production only within national boundaries
2. An MNC is a company that:
A. Operates only in its home country
B. Is owned only by governments
C. Owns or controls production in more than one country
D. Produces only agricultural goods
3. Which factor would most likely attract an MNC to a country?
A. High production costs
B. Limited market access
C. Availability of skilled workers at competitive costs
D. Restrictions on all investment
4. Money invested by an MNC in assets such as machinery and buildings in another country is called:
A. Domestic investment
B. Foreign investment
C. Public investment
D. Consumer expenditure
5. Which of the following is NOT a common way through which MNCs control production?
A. Buying local companies
B. Forming partnerships
C. Placing orders with small producers
D. Preventing all international trade
6. Foreign trade helps consumers mainly by:
A. Reducing their choices
B. Giving them access to a wider range of goods
C. Ending competition
D. Preventing imports
7. When goods from different countries compete in the same market, it leads to:
A. Market isolation
B. Market integration
C. Complete elimination of producers
D. Reduction in consumer choice
8. Which development has greatly reduced the time and cost of transporting goods?
A. Trade barriers
B. Container-based transportation
C. Import restrictions
D. Reduced communication
9. Which technology has played a major role in spreading services across countries?
A. Information and communication technology
B. Traditional farming tools
C. Manual transport
D. Handicrafts
10. Liberalisation means:
A. Increasing restrictions on foreign trade
B. Removing or reducing government restrictions on trade and investment
C. Stopping foreign investment
D. Banning imports
11. India began major liberalisation of foreign trade and investment policies around:
A. 1950
B. 1965
C. 1980
D. 1991
12. Trade barriers are used by governments mainly to:
A. Regulate international trade
B. Eliminate domestic production
C. Stop all exports
D. Increase unemployment
13. The WTO is primarily concerned with:
A. International trade rules
B. Domestic elections
C. National education systems
D. Local transport
14. Which group is generally more likely to benefit from the new opportunities created by globalisation?
A. People with education, skills and resources
B. Only workers in small industries
C. Only subsistence farmers
D. People completely disconnected from markets
15. Which sector in India has received significant opportunities from globalisation?
A. IT-enabled services
B. Only traditional agriculture
C. Only cottage industries
D. None of these
16. What is a major challenge faced by many small producers due to globalisation?
A. Absence of competition
B. Increased competition from imports and large companies
C. Unlimited access to cheap finance
D. Guaranteed employment
17. Flexible employment can result in:
A. Greater job security for every worker
B. More temporary employment and uncertainty
C. Permanent benefits for all workers
D. Complete removal of competition
18. SEZs are created mainly to:
A. Discourage investment
B. Attract investment and encourage production
C. Stop industrial development
D. Restrict infrastructure development
19. Which of the following best represents fair globalisation?
A. Benefits going only to large corporations
B. Opportunities being available more widely and benefits being shared fairly
C. Complete removal of workers’ rights
D. Protection of only wealthy consumers
20. Which statement best describes the impact of globalisation in India?
A. Everyone benefited equally
B. Nobody benefited
C. Its effects have been different for different groups
D. Only foreign companies benefited
Answer Key — MCQs
1-B, 2-C, 3-C, 4-B, 5-D,
6-B, 7-B, 8-B, 9-A, 10-B,
11-D, 12-A, 13-A, 14-A, 15-A,
16-B, 17-B, 18-B, 19-B, 20-C.
B. Fill in the Blanks
1. Globalisation refers to the increasing __________ of countries.
2. An MNC owns or controls production in __________ than one country.
3. Investment made by MNCs in another country is called __________ investment.
4. Foreign trade allows producers to reach markets beyond their __________ market.
5. Foreign trade leads to the __________ of markets.
6. Rapid improvements in __________ have accelerated globalisation.
7. The removal or reduction of government restrictions on trade and investment is called __________.
8. A tax imposed on imported goods is an example of a trade __________.
9. India introduced major liberalisation measures around the year __________.
10. The World Trade Organisation is commonly abbreviated as __________.
11. SEZ stands for Special __________ Zone.
12. Globalisation has created new opportunities particularly in __________-enabled services.
13. Workers employed for short periods according to the company’s requirements are examples of __________ employment.
14. Fair globalisation aims to ensure that the benefits of globalisation are __________ more widely.
15. MNCs often search for locations where the cost of __________ is low.
Answers
- integration
- more
- foreign
- domestic
- integration
- technology
- liberalisation
- barrier
- 1991
- WTO
- Economic
- IT
- flexible/temporary
- shared
- production
C. True or False
Write True (T) or False (F).
1. An MNC operates only in the country where it was originally established.
2. MNCs may collaborate with local companies.
3. Foreign investment involves investment in another country.
4. Foreign trade can increase the choices available to consumers.
5. Globalisation has completely eliminated competition between producers.
6. Technological development has helped globalisation.
7. Liberalisation means increasing restrictions on foreign trade.
8. India introduced major liberalisation measures in 1991.
9. The WTO deals with international trade.
10. Globalisation has benefited all sections of Indian society equally.
11. Small producers can face difficulties because of increased competition.
12. SEZs are intended to attract investment.
13. Flexible employment always guarantees greater job security.
14. IT has helped services to be performed across national borders.
15. Fair globalisation seeks a wider and more equitable sharing of benefits.
Answers
1-F, 2-T, 3-T, 4-T, 5-F,
6-T, 7-F, 8-T, 9-T, 10-F,
11-T, 12-T, 13-F, 14-T, 15-T.
D. Assertion–Reason Questions
Choose:
A. Both A and R are true, and R correctly explains A.
B. Both A and R are true, but R does not correctly explain A.
C. A is true, but R is false.
D. A is false, but R is true.
1.
Assertion (A): MNCs often spread production across different countries.
Reason (R): Different locations can provide different production advantages.
2.
Assertion (A): Foreign trade can integrate markets.
Reason (R): Trade allows goods to move between countries and increases competition.
3.
Assertion (A): Liberalisation encouraged India’s integration with the global economy.
Reason (R): It reduced many restrictions on foreign trade and investment.
4.
Assertion (A): Globalisation has benefited every worker equally.
Reason (R): Competition has created pressure on companies to reduce costs.
5.
Assertion (A): Information technology has supported globalisation.
Reason (R): It enables information and services to move rapidly across countries.
6.
Assertion (A): Small producers may face difficulties under globalisation.
Reason (R): They may have to compete with larger companies and cheaper imports.
Answers
1-A
2-A
3-A
4-D
5-A
6-A
E. Match the Following
| Column A | Column B |
|---|---|
| 1. MNC | A. International trade rules |
| 2. Foreign investment | B. Special industrial zone |
| 3. WTO | C. Company operating across countries |
| 4. SEZ | D. Investment in another country |
| 5. Liberalisation | E. Reduction of trade restrictions |
Answers
1-C
2-D
3-A
4-B
5-E
F. Very Short Answer Questions
1.
What is globalisation?
2.
Define an MNC.
3.
What is foreign investment?
4.
What is foreign trade?
5.
What is meant by market integration?
6.
What is liberalisation?
7.
What is a trade barrier?
8.
What is the WTO?
9.
What is an SEZ?
10.
What is flexible employment?
G. Short Answer Questions — 2/3 Marks
1.
Why do MNCs choose to locate production in different countries?
2.
Explain any three ways in which MNCs can organise production in other countries.
3.
How does foreign trade benefit consumers?
4.
How does foreign trade lead to integration of markets?
5.
How has technology contributed to globalisation?
6.
Why did India use trade barriers after Independence?
7.
Why did India begin liberalising its economy from 1991?
8.
How does liberalisation promote globalisation?
9.
Why can globalisation create difficulties for small producers?
10.
How has globalisation created opportunities in India’s service sector?
11.
Why are workers sometimes employed on a temporary basis under competitive conditions?
12.
Why do governments try to attract foreign investment?
H. Long Answer Questions — 4/5 Marks
1.
Explain the major factors that have enabled the process of globalisation.
Write about:
Technology → transportation → communication/IT → liberalisation → international trade and investment.
2.
Explain the different ways in which MNCs spread and control production across countries.
Include:
Factories → partnerships → buying local companies → placing orders with small producers.
3.
Explain the impact of globalisation on Indian consumers and producers.
Cover both sides:
Consumer benefits → opportunities for some producers → difficulties for small producers.
4.
“The impact of globalisation has not been uniform.” Explain.
Discuss the different experiences of:
- Consumers
- Large Indian companies
- MNCs
- Small producers
- Workers
5.
Explain the role of the government in making globalisation fairer.
Include:
- Worker protection
- Labour-law implementation
- Support for small producers
- Fairer WTO negotiations
- Protection of wider public interests
6.
Explain how foreign trade and foreign investment are connected with globalisation.
7.
Describe the advantages and disadvantages of liberalisation for the Indian economy.
8.
Explain why fair globalisation is necessary. What steps can help achieve it?
I. Case-Based Questions
Case Study 1 — MNC Production
A company designs a product in one country, obtains components from another, assembles the product elsewhere and provides customer support from yet another country. The company chooses each location according to its cost, skills, resources and market advantages.
Questions:
- What type of company is described here?
- What does this example show about modern production?
- Why might the company divide production among countries?
- Which process is illustrated by this arrangement?
Answers:
- MNC
- Production can be organised across countries.
- Different countries provide different advantages and can reduce costs.
- Globalisation/interlinking of production.
Case Study 2 — Foreign Trade
Suppose imported goods enter the Indian market at competitive prices. Consumers now have more options, while domestic producers have to improve their products and compete with foreign producers.
Questions:
- Which process is illustrated?
- How are consumers affected?
- How are domestic producers affected?
- What happens to market competition?
Answers:
- Foreign trade/globalisation
- They receive greater choice and may benefit from competitive prices.
- They face greater competition.
- Competition increases.
Case Study 3 — Workers
An export-oriented factory receives fluctuating orders. To control costs, the employer hires workers for shorter periods rather than keeping all of them permanently employed.
Questions:
- What type of employment is described?
- Why might the employer adopt this system?
- What problem can this create for workers?
- How does this connect with global competition?
Answers:
- Flexible/temporary employment
- To reduce labour costs and adjust employment according to demand.
- Less job security and fewer employment benefits.
- Competition encourages companies to reduce production costs.
J. HOTS / Thinking Questions
1.
Why can the same process of globalisation create opportunities for one group and difficulties for another?
2.
If foreign trade increases consumer choice, why might some domestic producers oppose greater imports?
3.
Why might an MNC prefer to divide different stages of production among several countries instead of producing everything in one place?
4.
Can globalisation be considered successful if economic growth benefits only a small section of society? Give reasons.
5.
Why is technological development important for globalisation but not sufficient by itself?
6.
Why does greater competition sometimes improve quality but also create pressure on workers?
K. Distinguish Between
1. Foreign Trade vs Foreign Investment
| Foreign Trade | Foreign Investment |
|---|---|
| Involves buying and selling across countries | Involves investment in another country |
| Connects producers and consumers through trade | Establishes/expands production or assets |
| Example: exporting goods | Example: establishing a factory abroad |
2. Trade Barrier vs Liberalisation
| Trade Barrier | Liberalisation |
|---|---|
| Restricts or regulates foreign trade | Reduces many restrictions |
| Can protect domestic producers | Encourages greater international competition |
| Example: import tax | Example: reducing restrictions on imports |
3. MNC vs Small Domestic Producer
| MNC | Small Domestic Producer |
|---|---|
| Operates across countries | Usually operates on a smaller/local scale |
| Often has greater financial resources | Usually has more limited resources |
| Can access international markets | May depend more heavily on domestic markets |
| Can organise production internationally | May face difficulty competing with large firms |
L. One-Word / One-Term Questions
1. Company controlling production in more than one country → _______
2. Investment made by an MNC in another country → _______
3. Reduction of restrictions on foreign trade and investment → _______
4. International organisation dealing with trade rules → _______
5. Special industrial zone designed to attract investment → _______
6. Tax imposed on imported goods → _______
7. Process through which markets of different countries become connected → _______
8. Technology that enables rapid communication and transfer of information → _______
Answers
- MNC
- Foreign investment
- Liberalisation
- WTO
- SEZ
- Import duty/tax
- Market integration
- Information and communication technology (ICT/IT)
15 QUESTIONS YOU MUST KNOW
If you’re short on time, prepare these 15 first:
- What is globalisation?
- Define MNC and explain its role.
- Why do MNCs invest in other countries?
- Explain the ways MNCs spread production.
- What is foreign investment?
- How does foreign trade integrate markets?
- Explain the role of technology in globalisation.
- What is liberalisation?
- Why did India introduce liberalisation in 1991?
- What is the WTO and what issues surround its functioning?
- Explain the positive effects of globalisation on India.
- Why has the impact of globalisation been unequal?
- How have small producers been affected?
- How has globalisation affected workers?
- What is fair globalisation and what can the government do to achieve it?