Globalisation and The Indian Economy Class 10 Worksheet Economics Chapter 3

Multiple Choice Questions
Q1: Identify the incorrect statement in respect of SEZs.
(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.
Ans: (a)

Q2: Companies which 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
Ans: (b)

Q3: Which of the following is an example of a trade barrier?
(a) Remittances to foreigners
(b) Cost of transportation
(c) Tax on imports
(d) Interest on bonds
Ans: (c)

Q4: Which of the following best describes an MNC?
(a) An MNC is a company that controls production of good and services in multiple nations.
(b) An MNC is a government organized body that controls the distribution of resources in a country.
(c) An MNC is an organization that ensures new technology is used by the farming sector of a country.
(d) An MNC is a conglomerate of domestic companies that controls production of goods and services in the domestic region.
Ans: a

Q5: WTO aims at:
(a) restricting trade practices.
(b) establishing rules for domestic trade.
(c) liberalising international trade.
(d) none of the above.
Ans: (c)

Q6: There were __________ countries who the members of the World Trade Organisation in 2006.
(a) 139
(b) 149
(c) 159
(d) 169
Ans: (b)

Q7: In what way did the pressure of competition affect the workers in the garment industry?
(a) Reduced cost of raw materials
(b) Reduced labour cost
(c) Decreased working hours
(d) Protection to workers
Ans: (b)

Fill in the Blank
Q1: ________ owns or controls production in more than one nation.
Ans: MNC

Q2: _______ monitors the liberalisation of trade at international level.
Ans: WTO

Q3: Another name for the World Bank is _____.
Ans: IBRD

Q4: Exports now finance over 80% of imports, as compared to 60% in 1985. This situation is because of ______.
Ans: Globalisation

Q5: Special Economic Zones are being set up by ________ and _________ governments.
Ans: Central, State

True & False
Q1: Globalisation and competition among producers are beneficial to the government.
Ans: False

Q2: MNCs set up production units on the basis of proximity to the markets.
Ans: True

Q3: MNCs, who set up production units in SEZ, do not have to pay taxes for first five years.
Ans: True

Q4: Foreign trade creates an opportunity for the retailers to reach beyond the domestic markets.
Ans: False

Q5: MNCs are playing a major role in the globalisation process.
Ans: True

Assertion and Reason Type Questions
Direction: In the following questions, a statement of assertion is followed by a statement of reason. Mark the correct choice as:
Q1. Assertion : Foreign trade and foreign investment results in disintegration of production across countries.
Reason: MNCs disrupt the production processes in domestic country.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.
Ans: D

Q2: Assertion: Globalization leads to increased competition in international and domestic markets.
Reason: Globalization also makes the consumers better off as they have a wider variety of goods to choose from at lower prices.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Ans: (b)

Q3: Assertion: Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.
Reason: Foreign trade expands the choice of goods beyond what is domestically produced.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.
Ans: (b)

Q4: Assertion: Global production has a complex structure.
Reason: Production of one good may take place in different parts of the world. For instance, an equipment may be formed by combining components produced in different countries.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.

Ans: (a)

Q5: Assertion: MNCs can exert a strong influence on production at distant locations.
Reason: MNCs set up partnerships with local companies, use local companies for supplies, compete witnqhe local companies or buy them up.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false.
Ans: (a)

Q6: Assertion: The removal of barriers to trade is known as liberalization.
Reason: federalization of trade allows businesses to freely decide which goods to import and export.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false. 
Ans: (a)

Q7: Assertion: Due to foreign trade, producers in different countries closely compete with each other.
Reason: Foreign trade leads to similar prices of good across boundaries, and the producers who do not offer competitive prices may lose the market share.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false. 
Ans: (a)

Q8: Assertion: A tax on imports makes the market for imported goods lucrative in terms of earning higher profits.
Reason: Taxes are imposed to ensure smooth trade between nations and higher tax revenues for the governments of the countries.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false. 
Ans: (d)

Q9: Assertion: Local businesses may set up joint production process with MNCs and earn higher profits.
Reason: MNCs can provide money for additional investments, like buying new machines for faster production.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false. 
Ans: (a)

Q10: Assertion: Rapid improvement in technology has been one major factor that has stimulated the globalization process.
Reason: Developing countries are likely to become at par with developed countries in terms of technological development due to globalization.
(a) If Both assertion and reason are true, and reason is the correct explanation of assertion.
(b) If Both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) If Assertion is true, but reason is false.
(d) If Both assertion and reason are false. 
Ans: (b)

Very Short Answer Type Questions
Q1: MNC stands for _________.
Ans: Multinational Corporation

Q2: Investment made by MNCs is called ___________.
Ans: Foreign Investment

Q3: Process of integration of different countries is called ___________.
Ans: Globalisation

Q4: MNCs increase ____________.
Ans: Competition, Price war and Quality

Q5: This helps to create an opportunity for the producers to reach beyond the domestic market.
Ans: Foreign trade

Q6: Why is fair globalisation necessary ?
Ans: Fair globalisation creates opportunities for all, and also ensures that the benefits of globalisation are shared in the best possible manner among all.

Q7: What are the ways to interconnect countries?
Ans: (i) Foreign trade,
(ii) Foreign investments, and
(iii) Movement of people.

Q8: When is money called an investment ?
Ans: The money that is spent to buy assets such as land, building, machines and other equipment is called investment.

Q9: Name some of the Indian multinationals.
Ans: Videocon (Electronics), Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (paints), Sundaram Fasteners (nuts and bolts) etc.

Q10: International Monetary Fund (IMF) is an organisation whose aim is to liberalise international trade.
Ans: World Trade Organisation (WTO) is an organisation whose aim is to liberalise international trade.

Short Answer Type Questions 
Q1: Examine any three conditions which should be taken care of by Multinational Companies to set up their production units.
Ans: The three conditions which should be taken care of by Multinational Companies to set up their production units are:

• Labour: There should be easy availability of cheap and skilled labour for the industries. This will help in reducing in the cost of production and maximizing the profit.
• Market: The markets should be close to the production units so that there should be less expenditure on the transport cost.
• Government policies: The government policies of that particular countries should be in favour of the company such as flexibility in labour laws etc. 

Q2: How is foreign trade interlinking markets of different countries? Explain with example.
Ans: Foreign trade means trade with other countries. When we trade with other countries then we connect with the markets of different countries.
For example, Chinese toys in the Indian market. In this process, the goods and services are produced and sold at global level. There is movement of technology and people between the countries. It gives opportunity to the local producers to reach beyond the domestic market. Buyers get different choice, price and quality.

Q3: ‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’ Justify the statement.
or
Why have the barriers on foreign trade and foreign investment been removed to a large extent by the Indian government? Explain.
Ans: Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991. Indian government decided to remove trade barriers due to the following reasons:

• The Indian government wanted the domestic producers to face the global competition.
• By this competition, the Indian producers j will also get a chance to improve their quality.
• Removal of trade barriers will allow the producers of different countries to trade with India.

Q4: “Globalisation and greater competition among producers has been advantageous to consumers.” Justify the statement with examples.
Ans: It is true to state that Globalisation and greater competition among producers has been of advantageous to consumers. The consumers are getting advantage in the following ways:

• They get different brands of the product.
• They get the goods and services at cheaper rate.

Q5: What is foreign trade? How does it integrate markets? Explain with examples.
or
How does foreign trade integrate the markets of different countries? Explain with examples.
Ans: Foreign trade means trade with other countries. When we trade with other countries then we connect with the markets of different countries.
For example, Chinese toys in the Indian market. In this process the goods and services are produced and sold at global level. There is movement of technology and people between the countries. It gives opportunity to the local producers to reach beyond the domestic market. Buyers get different choice, price and quality.
An MNC from USA producing the industrial equipment is designing its product in the research centres of the US, its components are manufactured in China, the assembling and the export work is done from Mexico and Eastern Europe and its call centres are there in India.

Q6: “Technology has stimulated the globalisation process.” Support the statement with examples.
or
“Information and Communication Technology has played a major role in spreading our production of services across countries”. Justify the statement with examples.
or
How has Information and Technology stimulated globalisation process? Explain with examples.
Ans: It is true to say that the Information and Communication Technology has played a major role in spreading our production of services across countries. Development in technology is one of themost important factors that has enabled the process of globalization. It can be studied under two different headings:

• Developments in transport technology: The world has done tremendous improvements in the field of transportation technology. Now we have different fastest means of transport with the help of which we can reach to different parts of the world in less time and can control trade and integrate the markets easily. 
• Developments in ICT (Information and Communication Technology): It includes telephones, mobile phones, computers, internet, fax, e-mails etc. A remarkable development can be seen in the field of ICT throughout the world.

Now the world is just a click away. With the help of ICT we can share and obtain information instantly across the globe at negligible cost.

Q7: How did Cargill Foods became the largest producer of the edible oils in India? Explain.
Ans: Cargill Foods, an American MNC has bought Indian company named Parakh Food. Now the control on the large marketing network and the four oil refineries has shifted to the Cargill Food. Cargill Food has now become the largest producer of edible oil in India.

Q8: How does foreign trade connect the markets of different countries? Explain with example.
Ans: Foreign trade integrates the markets in different countries through the following ways:

For example: Chinese toys in India. In this process the Goods and services and produced and sold at global level. There is movement of technology and people between the countries. It gives opportunity to the local producers to reach beyond the domestic market. Buyers get different choice, price and quality.
An MNC from USA producing the industrial equipment is designing its product in the research centres of the US, its Components are manufactured in china, the assembling and the export work is done from Mexico and Eastern Europe and its call centres are there is India.

Q9: How do Multinational Companies manage to keep the cost of production of their goods low? Explain with examples.
Ans: Due to the following reasons the Multinational Companies manage to keep the cost of production of their goods low:

• They set up their production units where there is easy availability of cheap and skilled labour.
• They look for the locations from the markets are close so that they will have to pay less transportation cost in supplying the final goods to the consumers.
• They set up their business in the countries where the government policies are favourable for them.

Such as in India the Indian government has given them the benefit of flexibility in labour laws.

Q10: How are MNCs spreading their production across countries? Explain with an example.
Ans: An MNC from USA producing the industrial equipment is designing its product in the research centres of the US, its Components are manufactured in China, the assembling and the export work is done from Mexico and Eastern Europe and its call centres are there is India.

Long Answer Type Questions
Q1: How has foreign trade been integrating markets of different countries? Explain with examples.
Ans: Foreign trade means trade with other countries. When we trade with other countries then we connect with the markets of different countries.
For example, Chinese toys in the Indian market. In this process the goods and services and produced and sold at global level. There is movement of technology and people between the countries. It gives opportunity to the local producers to reach beyond the domestic market. Buyers get different choice, price and quality.
An MNC from USA producing the industrial equipment is designing its product in the research, centres of the US, its components are manufactured in china, the assembling and the export work is done from Mexico and Eastern Europe and its call centres are there is India.

Q2: Explain any three ways by which MNCs exercise control on production.
Ans: The following are the three ways in which multinational corporations are spreading their products in different ways

• Buying up the Local Companies: This is most common route for MNC investment and expanding production. MNCs can do so because they have huge wealth. For example: Cargill Foods an American MNC has bought Indian company named Parakh Food. Now the control on the large marketing network and the four oil refineries has shifted to the Cargill Food. Cargill Food has now become the largest producer of edible oil in India.
• Joining hand with local companies: Sometimes the MNCs join hands with the local companies and do the production. In this process, the local companies get twin benefits: (t) they get foreign investment and (ii) MNCs provide newer technology to them for the production. For example: In 1995 Ford Motors an American company joined hand with the Indian company called Mahindra and Mahindra (manufacturer of jeeps and trucks).
• By placing orders: Sometimes MNCs just place orders with small producers around the world for the production of garments, footwear and sports items. After that, the products are supplied to the MNCs and sold under the brand name of the MNCs.

Q3: “The impact of globalisation has not been uniform.” Explain this statement.
Ans: Globalisation has not proved to be favourable for every section of the society. However, it has provided many positive results in the form of better technology, higher investments flow, increased trade flows, more choices for the consumers, origin of new industries etc. But there are examples where globalisation has proved to be detrimental for some sections. For example, increased competition with cheaper products of MNCs has led to the closing down of local industries which has resulted into large unemployment and expansion of unorganised sector. Similarly, due to foreign companies, Indian companies have also been demanding flexible labour laws which has resulted into the irregularity of the employment of workforce and reduced the surety of their job tenure. So, it can be said that the impact of globalisation has not been uniform.

Q4: Globalisation will continue in the future. Can you imagine the world would be like twenty years from now ? Give reasons for your answer.
Ans: Globalisation is a never ending process. In the coming time its magnitude is going to increase. Now foreign investment is mobilising production facilities from one country to another but MNCs still maintain their national character. But twenty years from now the MNCs will become so integrated with the countries that it will be difficult to separate the identity of the company with the country. Hindustan Unilever and Maruti are such companies even in the present times. The foreign trade will increase manifold and the reach of competitive products will be to every corner of the world. The consumers will be consuming same products in all the parts of the world. Their consumption will tend to be standardised. There will be no barrier on the movement of the people and people from all over the world will be able to work wherever they want to work. Similarly, the level of technology will have improved a lot and this will bring improvement in productivity.

Q5: Explain any five positive impacts of globalisation.
Ans: Globalisation and greater competition among producers have been of advantage to consumers, in terms of wider choice, improved quality and lower prices.

• Enormous increase in foreign investment through MNCs.
• Several of the top Indian companies have been able to benefit from globalisation as they got newer technology and collaboration with foreign companies.
• Some large companies emerged as MNCs Ex. Tata Motors, Infosys.
• New opportunities are created for companies providing services especially those involving IT.
• It has enabled the third world countries to get better technology at a cheaper rate.

Q6: How do MNCs interlink production across countries?
Ans: 

• MNC’s set up their production units in those areas which are quite close to the markets.
• It sets up production jointly with some of the local companies of the selected countries
• Sometimes large MNCs place orders for production with small producers and provide them money for additional investments.
• Sometimes MNCs buy local companies and then expand their production
• Provide latest technology for better and speedy production

Q7: Critically examine the functioning of WTO.
Ans:

• The operations of the WTO will lead to undue interference into the internal affairs of different countries.
• Domination of developed countries.
• Serves the interests of the developed nations.
• Access to markets of developed countries by developing countries is negligible’
• WTO rules forced the developing countries to remove trade barriers where as many developed countries unfairly retained trade barriers.

Q8: Describe the contribution of technology in promoting the process of globalization.
or
How has improvement in technology stimulated the globalisation process? Explain.
or
Explain the role of technology in stimulating globalisation process.
Ans: It is true to say that the Information and Communication Technology has stimulated the globalisation process and played a major role in spreading our production of services across countries. Technological development: development in technology is one of the most important factor that has enabled the process of globalization. It can be studied under two different headings:

• Developments in transport technology: The world has done tremendous improvements in the field of transportation technology. Now we have different fastest means of transport with the help of which we can reach to different parts of the world in less time and can control trade and integrate the markets easily.
• Developments in ICT (Information and Communication Technology): It includes telephones, mobile phones, computers, internet, fax, e-mails etc. A remarkable development can be seen in the field of ICT throughout the world.

Now the world is just a click away. With the help of ICT we can share and obtain information instantly across the globe at negligible cost.