Globalization
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CPA Auditing and Attestation (AUD) › Globalization
Globalization is often measured using the following metric:
World trade growth as a percentage of GDP
Shifts in global supply and demand curves
Exchange rate velocity
Exports as a percentage of imports
Explanation
Globalization represents the increased dispersion and integration of the world's economies. It is often measured as the growth in world trade as a percentage of GDP.
Each of the following is an effect from opening markets to foreign investment except:
An increase in the correlation of emerging stock markets with world markets
A decrease in investment growth rates
A change in the volatility of emerging stock market returns
A decrease in local firms' cost of capital
Explanation
Under this circumstance, investment growth rates will likely increase rather than decrease as there are more opportunities for investment and growth.
Increased globalization is made possible by each of the listed factors except:
Technological advancements including improved communications
Reduced transportation costs
Regulation of currency values through the International Monetary Fund
Deregulation of international financial markets
Explanation
The IMF does not regulate currency values. Its activities are designed to stabilize exchange rates but it is not empowered to regulate currency values.
All of the following nations are considered emerging nations except:
Russia
Brazil
Indonesia
China
Explanation
The only other emerging nation not listed here is India.
The concept of a global economic balance of power anticipates:
Exchange rates are self regulating
A distribution of power and influence that ensures that no one nation or group of nations will dominate or interfere with the activities of others
The industrialized nations of the G6 will always lead the globe
Trade balances are self regulating
Explanation
The concept of balance of power anticipates that no one nation will dominate or interfere with the activities of others.
Which of the following is not a factor that drives globalization?
Infrastructure and transportation improvements
Deregulation of international financial markets
Technological advancements
Stronger currencies
Explanation
Stronger currencies have no impact on globalization, as currencies fluctuate all the time. These other factors would much more likely to facilitate international trade and global markets.