Question: Mention any two feature of Multinational Corporations.
- A MNC is company that owns or controls production in more than one nation.
- A MNC sells its finished products globally.
Question: State the basic cause which prompts MNCs to spread production across the borders.
Answer: Lower Cost
Question: Why more and more MNCs are investing in China?
Answer: Because China provides the advantage of being a cheap manufacturing location.
Question: Why MNCs are setting their customer care centers in India?
Answer: Because they provide cheap educated English speaking youth who can provide customer care services and save 50% to 60% costs.
Question: What is investment?
Answer: The money that is spent to buy assets such as land, building, machines and other equipment is called investment.
Question: What is foreign investment?
Answer: Investments by citizens or company of one nation to other nation is known as investment. Investment made by MNCs is also called foreign investment.
Question: How is production different in these days as compared to the middle of the 20th century?
Answer: Until the middle of the twentieth century, production was largely organised within the countries; what crossed the boundaries of these countries were raw materials, food stuff and finished products. But now production process is widely dispersed and out across the globe.
Question: Which MNC is the largest producer of edible oil in India? How has it become the largest producer?
Answer: Cargil, an American MNC is the largest producer of edible oil in India. It became the largest producer by buying Parakh Foods.
Question: Mention any two ways through which MNCs expand production.
- By setting up partnership with local companies.
- By buying the local companies.
Question: Suppose the Indian government puts a tax on import of toys. What is its likely impact on imports?
Answer: If the government puts a tax on imports the buyers will have to pay a higher price for imports. So imports will fall.
Question: What far reaching changes were made in India’s economic policy in 1991?
Answer: In 1991 Indian government decided to introduce New economic policy of liberalisation, globalisation and privations. Under the new policy unwanted restrictions were removed from trade, industry and the market.
Question: What is WTO?
Answer: It is an international organisation which was established to promote and liberate international trade.
Question: “Globalisation and greater competition among producers both local and foreign producer has been of advantage to consumers has been of advantage to consumers”. Justify.
Answer: There is greater choice for the consumers who now enjoy improved quality and lower prices for several products. As a result, people today enjoy much higher standards of living than was possible earlier.
Question: State any two factors responsible for globalization.
- Growth of MNCs
- Growth of technology
- Development in telecommunication and means of transportation.
Question: Why people usually move from one country to another?
Answer: People move search of better income, better jobs or better education.
Question: Define liberalization.
Answer: Removing unwanted barriers or restrictions set by the government from trade and industry is known as liberalization.
Question: What are trade barriers? Give one example.
Answer: Any kind of restrictions which are imposed by the government of a country to check free flow of goods and services are known as trade barriers. For example, to check the free flow of Chinese toys in the Indian market Indian government can impose tax on imports.
Question: What is importance of trade barrier for the government?
Answer: Government can use trade barriers to increase or decrease foreign trade and to decide what kinds of goods and how much of each, should come into the country.
Question: Name an organisation whose aim is to liberate international trade.
Answer: World Trade Organisation.
Question: State any two steps which have been taken by the government to attract foreign investment.
- Special Economic Zones are being set up.
- Government has allowed flexibility in the labour laws.
Question: Name any two India MNCs.
Answer: Tata Motors, Infosys, Ranbaxy, Asian Paints etc.
Question: Why do MNCs set up their officer and factories in those regions where they get cheap labour and other resources?
Answer: To lower the cost of production.
Question: Due to which reason the latest models of different items are available within our reach?
Answer: Due to globalization.