Statement-Based Question -Globalisation and the Indian Economy

Topic 1: Production Across Countries

Q1.

A company designs a smartphone in Country X, obtains specialised components from Countries Y and Z, and assembles the final product in Country W. Consider the following statements:

Statement I: Production can be organised across different countries when firms find economic advantages in using resources available in different locations.

Statement II: International production necessarily means that every stage of production must be completed in the country where the final product is sold.

Choose the correct option:

A. Statement I is correct, but Statement II is incorrect.
B. Statement I is incorrect, but Statement II is correct.
C. Both Statement I and Statement II are correct.
D. Both Statement I and Statement II are incorrect.

Q2.

A multinational company shifts one stage of production from a high-cost location to another country where skilled workers and suitable infrastructure are available.

Statement I: Such a decision can be related to the firm’s attempt to reduce production costs.

Statement II: The movement of production to another country automatically means that workers in the original country will lose all employment.

A. Both Statement I and Statement II are correct.
B. Statement I is correct, but Statement II is incorrect.
C. Statement I is incorrect, but Statement II is correct.
D. Both Statement I and Statement II are incorrect.

Q3.

A garment company purchases cotton from one country, manufactures cloth in another, and uses a third country for stitching and packaging.

Statement I: The example illustrates how production can be spread across countries.

Statement II: Such geographical separation can allow firms to use different advantages offered by different countries.

A. Statement I is incorrect, but Statement II is correct.
B. Both Statement I and Statement II are incorrect.
C. Both Statement I and Statement II are correct.
D. Statement I is correct, but Statement II is incorrect.

Q4.

A foreign company establishes a factory in India after finding suitable labour, markets and production facilities.

Statement I: Foreign investment can directly connect production in one country with business operations in another.

Statement II: Foreign investment always refers only to buying products from another country.

A. Both Statement I and Statement II are correct.
B. Both Statement I and Statement II are incorrect.
C. Statement I is incorrect, but Statement II is correct.
D. Statement I is correct, but Statement II is incorrect.

Q5.

A company decides to manufacture a particular component in a country where producing that component is relatively efficient.

Statement I: Differences in production costs and availability of resources can influence the location of production.

Statement II: Companies have no economic reason to divide production among different countries.

A. Statement I is correct, but Statement II is incorrect.
B. Both Statement I and Statement II are correct.
C. Statement I is incorrect, but Statement II is correct.
D. Both Statement I and Statement II are incorrect.

Q6.

A firm expands its production network to several countries rather than depending entirely on one country.

Statement I: Such a strategy can make production internationally interconnected.

Statement II: International production networks are possible only when the final goods are exported to every country involved.

A. Both Statement I and Statement II are correct.
B. Statement I is correct, but Statement II is incorrect.
C. Both Statement I and Statement II are incorrect.
D. Statement I is incorrect, but Statement II is correct.

Topic 2: Interlinking Production Across Countries

Q7.

An MNC places orders with small Indian manufacturers for specific components required in its final product.

Statement I: MNCs can link local producers with international production networks.

Statement II: Such links may allow local producers to become suppliers to markets beyond their immediate local market.

Q8.

An MNC enters into a partnership with an Indian company and provides it with technical specifications for producing a component.

Statement I: MNCs may organise production through partnerships with local companies.

Statement II: An MNC must own 100% of every company involved in its production network.

Q9.

A local manufacturer receives a large order from an MNC and upgrades its machines to meet international quality standards.

Statement I: A relationship with an MNC can sometimes encourage local producers to improve technology and production methods.

Statement II: Such a relationship can never influence the production practices of a local company.

Q10.

An MNC chooses India as a production base and supplies some products to foreign markets.

Statement I: The decision can connect Indian production with international markets.

Statement II: MNC production in India necessarily serves only Indian consumers.

Q11.

An Indian company becomes part of an MNC’s supply chain but remains independently owned.

Statement I: Participation in an international production network does not necessarily require the local company to become completely foreign-owned.

Statement II: MNCs can establish production links with local companies through various arrangements.

Q12.

An MNC places production orders with several countries according to their production advantages.

Statement I: MNCs can organise production internationally by coordinating activities in different countries.

Statement II: Such coordination is one reason why production in different countries can become interlinked.

Topic 3: Foreign Trade and Integration of Markets

Q13.

Before liberalisation, a consumer could purchase only a limited range of imported electronic goods. After import restrictions were reduced, several foreign brands entered the market.

Statement I: Foreign trade can increase the variety of goods available to consumers.

Statement II: Foreign trade necessarily reduces the variety of goods available in domestic markets.

Q14.

An Indian producer begins selling its products in another country, while foreign producers also sell similar products in India.

Statement I: Producers in different countries may become competitors through international trade.

Statement II: Foreign trade can connect producers and consumers in different countries.

Q15.

A domestic producer faces competition from imported goods after trade barriers are reduced.

Statement I: Increased competition can put pressure on domestic producers to improve quality or reduce prices.

Statement II: Competition from imports has no effect on the decisions of domestic producers.

Q16.

Consumers in India start buying a product made abroad, while consumers abroad buy Indian products.

Statement I: Foreign trade can contribute to the integration of markets across countries.

Statement II: Market integration means that all products must have exactly the same price in every country.

Q17.

A domestic company starts exporting its products after receiving orders from foreign buyers.

Statement I: Access to foreign markets can create opportunities for domestic producers.

Statement II: Foreign trade affects only consumers and has no relevance for producers.

Q18.

A fall in trade restrictions enables firms to buy inputs from abroad and sell finished products in foreign markets.

Statement I: Reduction in trade barriers can facilitate greater interaction between domestic and foreign markets.

Statement II: Trade barriers are irrelevant to the extent of international economic integration.

A. Both Statement I and Statement II are correct.
B. Statement I is incorrect, but Statement II is correct.
C. Statement I is correct, but Statement II is incorrect.
D. Both Statement I and Statement II are incorrect.

Topic 4: What Is Globalisation?

Q19.

A company sources raw materials from one country, manufactures components in another and sells the final product in several countries.

Statement I: The example reflects the growing integration of production and markets across countries.

Statement II: Globalisation refers only to the movement of people between countries.

Q20.

An Indian consumer uses a product manufactured through production activities spread across several countries.

Statement I: Globalisation can involve the increasing integration of production across countries.

Statement II: Globalisation has no connection with the integration of markets.

Q21.

A company has production facilities in several countries and sells its products in many international markets.

Statement I: MNCs can play an important role in the process of globalisation.

Statement II: The activities of MNCs can link production and markets in different countries.

Q22.

A product sold in India contains components manufactured in different countries.

Statement I: The example demonstrates that production activities can be spread internationally.

Statement II: Such international interconnection is unrelated to the process of globalisation.

Q23.

A foreign brand enters the Indian market and competes with Indian producers.

Statement I: Globalisation can increase interaction and competition between producers from different countries.

Statement II: Globalisation necessarily eliminates all domestic producers from the market.

Q24.

A consumer can choose among products produced by companies operating in different countries.

Statement I: Greater integration of markets can expand the choices available to consumers.

Statement II: Globalisation means that consumers can buy only products produced within their own country.

Topic 5: Factors That Have Enabled Globalisation

Q25.

A manufacturer can communicate production instructions instantly with its factory located thousands of kilometres away.

Statement I: Improvements in information and communication technology have made coordination across countries easier.

Statement II: Better communication technology has no role in international production networks.

Q26.

A company uses faster transport to move components between countries.

Statement I: Improvements in transportation can facilitate the movement of goods across countries.

Statement II: Faster transportation can support the geographical division of production.

Q27.

An MNC monitors production in factories located in several countries using digital communication systems.

Statement I: Advances in technology have made it easier for MNCs to coordinate activities across countries.

Statement II: Technological development has made international coordination more difficult.

Q28.

A government removes restrictions on foreign investment and allows foreign companies greater freedom to invest.

Statement I: Liberalisation of foreign investment policies can encourage greater participation of MNCs.

Statement II: Liberalisation means that all government regulation disappears completely.

Q29.

A company can now coordinate suppliers in different countries through video meetings, digital data sharing and rapid communication.

Statement I: Technological advances can reduce the practical difficulties involved in coordinating internationally dispersed production.

Statement II: Communication technology can contribute to the expansion of global production networks.

Q30.

A country reduces restrictions on imports and foreign investment as part of its economic reforms.

Statement I: Liberalisation can increase the interaction of the domestic economy with the world economy.

Statement II: Liberalisation necessarily means that foreign companies will stop investing in the country.

Topic 6: Liberalisation of Foreign Trade and Investment Policy

Q31.

India reduced several restrictions on imports after the beginning of economic reforms.

Statement I: The reduction of trade barriers made it easier for foreign goods to enter the Indian market.

Statement II: The removal of trade barriers completely ended the role of foreign trade in the Indian economy.

Q32.

An Indian producer begins facing competition from imported products after import restrictions are reduced.

Statement I: Liberalisation can expose domestic producers to greater international competition.

Statement II: Liberalisation protects domestic producers from all foreign competition.

Q33.

The government removes certain restrictions on foreign investment.

Statement I: Greater freedom for foreign investment can encourage MNCs to establish or expand production activities in India.

Statement II: Foreign investment can have no connection with production decisions.

Q34.

A domestic manufacturer improves its product after foreign companies enter its market.

Statement I: Liberalisation may increase competitive pressure on domestic producers.

Statement II: Increased competition can sometimes encourage producers to improve quality.

Q35.

A government reduces import restrictions but continues to regulate certain economic activities.

Statement I: Liberalisation does not necessarily mean that the government completely withdraws from the economy.

Statement II: Liberalisation means that every form of government regulation must immediately disappear.

Q36.

A foreign company decides to invest in India after policy restrictions are reduced.

Statement I: Changes in government policies can influence decisions regarding foreign investment.

Statement II: Government policies have no effect on the investment decisions of MNCs.

Topic 7: World Trade Organisation (WTO)

Q37.

Countries participate in an international organisation that works towards establishing rules for international trade.

Statement I: The WTO deals with rules governing international trade.

Statement II: The WTO exists primarily to prevent all international trade between countries.

Q38.

A developing country argues that developed countries should reduce trade restrictions and subsidies that disadvantage producers in developing countries.

Statement I: Developing countries have raised concerns about unequal conditions in international trade.

Statement II: Membership of the WTO automatically guarantees identical trade benefits to every country.

Q39.

A country changes some of its trade policies to comply with international trade agreements.

Statement I: WTO agreements can influence the trade policies of member countries.

Statement II: WTO membership means that a country is completely free to ignore all agreed international trade rules.

Q40.

Farmers in a developing country argue that subsidies provided by richer countries can make competition difficult.

Statement I: Trade policies and subsidies in one country can affect producers in other countries.

Statement II: International trade policies can have distributional effects across countries.

Q41.

A country expects international trade rules to provide opportunities for its producers while also protecting its interests in negotiations.

Statement I: WTO negotiations involve countries with different economic interests.

Statement II: Every WTO member necessarily has exactly the same economic interests.

Q42.

A developing country participates in WTO discussions about agricultural trade.

Statement I: Developing countries participate in discussions concerning international trade rules.

Statement II: WTO discussions can involve disagreements over how trade rules affect different groups of countries.

Topic 8: Impact of Globalisation in India

Q43.

An Indian consumer finds a wider range of products and brands after greater integration with international markets.

Statement I: Globalisation can provide consumers with greater choice.

Statement II: Globalisation necessarily reduces the number of products available to consumers.

Q44.

An Indian company receives orders from an MNC and begins producing goods according to international standards.

Statement I: Globalisation has created opportunities for some Indian companies to participate in international production networks.

Statement II: Globalisation has provided identical benefits to every Indian producer.

Q45.

A large Indian company invests in modern technology to compete with international firms.

Statement I: Competition associated with globalisation can encourage some Indian companies to adopt improved technology.

Statement II: All Indian companies necessarily respond to global competition in exactly the same way.

Q46.

A company establishes a factory in a Special Economic Zone and receives facilities designed to encourage investment and exports.

Statement I: SEZs were developed to attract investment and promote export-oriented production.

Statement II: SEZs were created specifically to prevent companies from participating in international trade.

Q47.

An Indian service company gains foreign clients through improved communication technology.

Statement I: Globalisation has created opportunities for some Indian service-sector companies to serve international markets.

Statement II: The effects of globalisation are limited only to manufacturing industries.

Q48.

A small Indian producer faces difficulty competing with large companies that have greater financial and technological resources.

Statement I: The impact of globalisation can differ among producers depending on their ability to face competition.

Statement II: Globalisation necessarily affects every producer in exactly the same manner.

Topic 9: Challenges and Unequal Effects of Globalisation

Q49.

A small producer loses some customers after cheaper products from large companies become available.

Statement I: Increased competition can create difficulties for small producers who have limited resources.

Statement II: Every small producer automatically benefits from increased international competition.

Q50.

A worker employed on a temporary contract is uncertain whether the job will continue after the company’s demand falls.

Statement I: Globalisation can be associated with increased employment opportunities in some sectors while some workers may also face greater job insecurity.

Statement II: Globalisation guarantees permanent employment to all workers.

Q51.

A large company expands after gaining access to international markets, while a small producer struggles to compete.

Statement I: The benefits of globalisation may not be equally distributed among different producers.

Statement II: The unequal impact means that globalisation must produce identical outcomes for all firms.

Q52.

A factory introduces new technology after facing international competition and needs fewer workers for a particular task.

Statement I: Technological and competitive changes associated with globalisation can alter employment patterns.

Statement II: Any technological improvement necessarily increases employment in every situation.

Q53.

A large Indian company becomes more successful after entering international markets, while a small producer continues to struggle.

Statement I: The ability to invest in technology and access markets can influence how firms experience globalisation.

Statement II: Differences in financial and technological capacity can contribute to different outcomes for producers.

Q54.

A government observes that some groups benefit substantially from globalisation while others face difficulties.

Statement I: The impact of globalisation can be uneven across workers, producers and consumers.

Statement II: An uneven impact means that globalisation has no positive effects for any group.

Topic 10: The Struggle for a Fair Globalisation

Q55.

Workers demand better working conditions while producers ask the government to ensure fair opportunities in international competition.

Statement I: The idea of fair globalisation includes addressing the concerns of groups that may not benefit equally from globalisation.

Statement II: Fair globalisation means that only large companies should receive the benefits of international trade.

Q56.

A government introduces policies to protect workers and support producers that face difficulties because of international competition.

Statement I: Government policies can influence how the benefits and costs of globalisation are distributed.

Statement II: Government has no role in ensuring that globalisation becomes fairer.

Q57.

Developing countries demand fairer international trade rules during global trade negotiations.

Statement I: Developing countries can seek changes in international trade rules to protect their interests.

Statement II: Fair globalisation depends only on the decisions of individual consumers.

Q58.

A government supports small producers through policies that help them compete in a changing market.

Statement I: Supporting vulnerable producers can be part of efforts to make globalisation more inclusive.

Statement II: Making globalisation fairer requires ignoring the difficulties faced by small producers.

Q59.

Workers, consumer groups and organisations representing developing countries raise concerns about the effects of globalisation.

Statement I: Different groups can participate in debates about how globalisation should be managed.

Statement II: The struggle for fair globalisation involves concerns about how the gains from globalisation are shared.

Q60.

A country participates in international trade while also seeking policies that protect the interests of workers and weaker producers.

Statement I: Fair globalisation does not necessarily mean ending international trade.

Statement II: Efforts can be made to make the process of globalisation more equitable.

Detailed Answer Key

Q.	Ans.	Explanation
1	A	Production can be divided among countries according to the availability of resources, skills and cost advantages. It does not have to occur entirely in the country where the product is sold.
2	B	Firms may shift production to reduce costs or use particular advantages. However, such movement does not automatically eliminate all employment in the original country.
3	C	The example shows production being divided among countries. Different countries can provide different advantages for particular stages of production.
4	D	Foreign investment involves investment by a foreign company or investor in another country; it is not simply the purchase of goods from abroad.
5	A	Production location can depend on costs and resource availability. Firms can therefore divide production internationally when it provides economic advantages.
6	B	International production networks connect production activities in different countries. They do not require the final product to be exported to every country involved.
7	A	MNCs can establish links with local producers and integrate them into wider production networks. This can give local producers access to larger markets.
8	D	MNCs may work with local companies through partnerships and other arrangements. Complete ownership is not necessary in every production relationship.
9	B	An MNC relationship can encourage improvements in machinery, quality and production methods. Therefore, Statement II is incorrect.
10	A	Production in India can be connected to foreign markets through MNC networks. It does not necessarily serve only Indian consumers.
11	C	A local firm can participate in an international supply chain without becoming completely foreign-owned. MNCs use different organisational arrangements.
12	A	MNCs coordinate production across countries, making production activities in different locations interdependent.
13	B	Reduced import restrictions can allow more foreign products to enter domestic markets, increasing consumer choice.
14	C	Foreign trade connects producers and consumers across countries and can make producers from different countries competitors.
15	A	Import competition can encourage domestic producers to improve quality, reduce costs or otherwise respond to competitive pressure.
16	B	Foreign trade can integrate markets, but integration does not require identical prices in every country because costs and market conditions differ.
17	A	Export markets can provide new opportunities for domestic producers. Foreign trade is therefore relevant to producers as well as consumers.
18	C	Lower trade barriers can increase interaction between domestic and international markets. Trade barriers therefore matter for international economic integration.
19	B	Globalisation involves increasing integration of production and markets across countries. It is much broader than simply movement of people.
20	D	Globalisation involves both production and market integration. Statement II incorrectly excludes markets from the concept.
21	B	MNCs are important participants in globalisation because their production and sales activities can operate across several countries.
22	B	Components made in different countries illustrate international production networks, which are directly connected with globalisation.
23	C	Foreign firms can increase competition in domestic markets, but this does not mean that every domestic producer will disappear.
24	B	Market integration can increase consumer choice by making products from different countries available. It does not restrict consumers to domestic products.
25	A	Modern communication technology allows firms to coordinate activities over long distances quickly and efficiently.
26	A	Better transportation facilitates the movement of components and finished goods and therefore supports international division of production.
27	D	Technology has generally made international coordination easier rather than more difficult.
28	B	Liberalisation can encourage foreign investment, but it does not mean that every form of government regulation disappears.
29	B	Digital communication reduces coordination difficulties and can support internationally dispersed production networks.
30	C	Liberalisation can increase interaction with the global economy. It does not imply that foreign investment will stop.
31	A	Reducing trade barriers makes it easier for imported goods to enter the domestic market. It does not end foreign trade.
32	B	Liberalisation can expose domestic firms to greater foreign competition; it does not protect them from it.
33	D	Greater freedom for foreign investment can attract MNCs and influence their production decisions.
34	A	Liberalisation can increase competitive pressure, and competition can encourage firms to improve quality and efficiency.
35	A	Liberalisation means reducing certain restrictions; it does not necessarily mean complete withdrawal of government regulation.
36	B	Government policies concerning foreign investment can affect the attractiveness and conditions of investing in a country.
37	A	The WTO is an international organisation concerned with rules governing international trade. Its purpose is not to stop trade.
38	B	Developing countries have raised concerns regarding unequal trade conditions. WTO membership does not guarantee identical benefits to all countries.
39	D	WTO agreements can influence member countries’ trade policies. Membership involves participation within agreed trade rules.
40	A	Subsidies and trade policies can affect producers in other countries, so international trade policies can have effects across countries.
41	A	Countries can have different economic interests during WTO negotiations. They do not necessarily have identical interests.
42	C	Developing countries participate in WTO discussions, and disagreements can arise because countries experience trade rules differently.
43	B	Globalisation can give consumers access to a wider range of goods and brands. It does not necessarily reduce consumer choice.
44	D	Some Indian companies have benefited by joining international production networks, but benefits have not been identical for all producers.
45	A	Competition can encourage some large Indian companies to invest in technology. However, firms do not all respond in exactly the same way.
46	B	SEZs were created to attract investment and promote export-oriented production. Their purpose was not to prevent international trade.
47	A	Some Indian service-sector companies have gained access to international markets. Globalisation is not restricted to manufacturing.
48	B	Firms with different financial, technological and organisational capacities can experience globalisation differently.
49	A	Small producers with limited resources can face difficulties when competition increases. Global competition does not automatically benefit every small producer.
50	B	Globalisation can create opportunities in some sectors while employment may become uncertain for some workers. Permanent employment is not guaranteed.
51	D	Globalisation can produce different outcomes for different firms. Therefore, unequal outcomes do not mean that all firms must experience it identically.
52	B	Technology can change the demand for particular types of labour. Technological improvement does not necessarily increase employment in every task.
53	B	Financial and technological capacity can affect how firms respond to global competition, producing different outcomes.
54	C	Different groups can experience globalisation differently. An uneven impact does not mean that no group receives benefits.
55	A	Fair globalisation involves considering the interests of groups that may not benefit equally. It is not intended exclusively for large firms.
56	B	Government policies can influence how the gains and difficulties associated with globalisation are distributed.
57	D	Developing countries can seek fairer international trade rules. Fair globalisation is not determined only by individual consumer decisions.
58	B	Supporting vulnerable or small producers can be part of efforts to make globalisation more inclusive. Ignoring their difficulties would contradict this objective.
59	B	Different groups can participate in debates about globalisation, including how its gains and costs are distributed.
60	A	Fair globalisation does not require ending international trade. Policies can instead seek to make the process more equitable and inclusive.

Short Answer Key

Q. No.	Ans.	Q. No.	Ans.	Q. No.	Ans.	Q. No.	Ans.
1	A	16	B	31	A	46	B
2	B	17	A	32	B	47	A
3	C	18	C	33	D	48	B
4	D	19	B	34	A	49	A
5	A	20	D	35	A	50	B
6	B	21	B	36	B	51	D
7	A	22	B	37	A	52	B
8	D	23	C	38	B	53	B
9	B	24	B	39	D	54	C
10	A	25	A	40	A	55	A
11	C	26	A	41	A	56	B
12	A	27	D	42	C	57	D
13	B	28	B	43	B	58	B
14	C	29	B	44	D	59	B
15	A	30	C	45	A	60	A