CBSE Class 10 Social Science Globalisation and the Indian Economy Worksheet

Multiple Choice Questions

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

Answer : C

Question : 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.

Answer : A

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

Answer : B

Question : 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

Answer : B

Question : 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

Answer : B

Question : Match the following Questions:

Options:
(a) A-i, B-ii, C-iii
(b) A-i, B-iii, C-ii
(c) A-ii, B-iii, C-i
(d) A-ii, B-i, C-iii

Answer : B

Question : 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

Answer : C

Question : Which of the following is a reason for the government to impose barriers on trade?
(a) To regulate the type and amount of goods that can enter the country.
(b) To increase competition in domestic market.
(c) To remove monopoly markets from the country.
(d) To improve the performance of domestic producers.

Answer : D

Question : Match the following Questions:

Options:
(a) A-i, B-ii, C-iii
(b) A-i, B-iii, C-ii
(c) A-iii, B-i, C-ii
(d) A-ii, B-iii, C-i

Answer : C

Question : 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.

Answer : A

FILL IN THE BLANK :

Question. .......... owns or controls production in more than one nation.

Answer  : MNC

Question. .......... monitors the liberalisation of trade at international level.

Answer  : WTO

Question. Another name for the World Bank is .......... .

Answer  : IBRD

Question. Exports now finance over 80% of imports, as compared to 60% in 1985. This situation is because of .......... .

Answer : Globalisation

Question. Special Economic Zones are being set up by .......... and .......... governments.

Answer : Central, State

TRUE/FALSE :

Question. Globalisation and competition among producers are beneficial to the government.

Answer : False

Question. MNCs set up production units on the basis of proximity to the markets.

Answer : True

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

Answer : True

Question. Foreign trade creates an opportunity for the retailers to reach beyond the domestic markets.

Answer : False

Question. MNCs are playing a major role in the globalisation process.

Answer : True

ASSERTION AND REASON :

DIRECTION : Mark the option which is most suitable :‘
(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.

Question. Assertion : Foreign trade and foreign investment results in disintegration of production across countries.
Reason : MNCs disrupt the production processes in domestic country.

Answer : D

Question. 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.

Answer : B

Question. 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.

Answer : B

Question. 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.

Answer : A 

Question. 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.

Answer : A 

Question. 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.

Answer : B

Question. 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.

Answer : A 

Question. 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.

Answer : D

Question. 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.

Answer : A 

Question. 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.

Answer : B
 

Very Short Answer Type Questions 

Question : MNC stands for _____________
Answer : Multinational Corporation

Question : Investment made by MNCs is called ____________
Answer : Foreign Investment

Question : Process of integration of different countries is called ____________
Answer : Globalisation

Question : MNCs increase _______________
Answer : Competition, Price war and Quality

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

Question : Foreign Trade ________
Answer : Increases earnings

Question : Globalisation was stimulated by _____________
Answer : Transportation

Question : Production of services across countries has been facilitated by ____________
Answer : Information and Communication Technology

Question : Tax on imports is an example of ___________
Answer : Trade barrier

Question : Liberalisation does not include ______________.
Answer : Introducing quota system

Question. What do you mean by FDI?
Answer :  Foreign Direct Investment.

Question. Name two Indian Companies which are also known as MNC.
Answer :  TATA Motors, Bajaj

Question. Name the organization lay emphasize Liberalization of foreign trade and Foreign Investment.
Answer :  World Trade Organization

Question. What is the most common route for investments by MNCs in countries around the world?
Answer :  Buy existing local companies

Question. What are SEZ?
Answer :  Special Economic Zone

Short Answer Type Questions : 

Question : Analyse any five positive effects of globalisation on the India economy.
Answer : The visible impacts of globalisation on the Indian economy can be described in following ways:
(i) There is a wide choice of goods and services in the markets.
(ii) The latest models of digital cameras, mobile phones, and television made by leading manufacturers of the world are available in the markets. These products are affordable and within the reach of the people.
(iii) Several improvements in the transportation technology has made much faster the delivery of goods across long distances and that too at lower costs.
(iv) Improvement in information and telecommunication technology is even more remarkable. The invention and use of computers, internet, mobile phone, fax, etc, has made contact with each other around the world quite easy.
(v) New jobs have been created in industries where MNCs have invested such as electronics, fast food, cell phones etc.
(vi) Some Indian companies have become multinational themselves due to globalisation, such as Tata Motors (automobiles), Ranbaxy (medicines), Infosys (computer and information technology), L & T (construction).

Question : “The impact of globalisation has not been uniform.” Explain this statement.
Answer : 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.

Question : Globalisation will continue in the future. Can you imagine the world would be like twenty years from now ? Give reasons for your answer.
Answer : 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.

Source/Case Based Questions

Question : Read the extract given below and answer the questions that follow:

There are a variety of ways in which the MNCs are spreading their production and interacting with local producers in various countries across the globe. By setting up partnerships with local companies, by using the local companies for supplies, by closely competing with the local companies or buying them up, MNCs are exerting a strong influence on production at these distant locations. As a result, production in these widely dispersed locations is getting interlinked.

Answer the following MCQs by choosing the most appropriate option:

(i) 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 organised body that controls the distribution of resources in a country.
(c) An MNC is an organisation that ensures new technology is used by the farming sector of a country.
(d) An MNC is a conglomerate of domestic companies that control production of goods and services in the domestic region.
Answer : (a) An MNC is a company that controls production of good and services in multiple nations.

(ii) Which of the following is an advantage of globalisation to multinational companies?
(a) Multinational companies do not have to procure raw materials from other countries as globalisation leads to selfsufficiency of companies.
(b) Spreading out production across international borders can help in lowering the cost of production.
(c) When multinational companies expand production across the world, they do not have to pay taxes as they help in generating employment.
(d) Multinational companies can easily put the burden of increased cost of production on global consumers and continue to earn high profits.
Answer : (b) Spreading out production across international borders can help in lowering the cost of production.

(iii) Rajiv has a textile firm. For carrying out production, Rajiv spent money on procuring thread from traders,  buying machine and equipment and built a warehouse to store the cloth produced. The expenditure incurred by Rajiv for conducting the production process is termed as ………… .
(a) investment
(b) profits
(c) equity
(d) interest
Answer : (a) investment.

(iv) Which of the following can be a benefit to local businesses if they conduct business with MNCs?
(a) Local businesses do not have to invest in the business as MNCs do all the investment.
(b) MNCs provide cheap labour to local businesses.
(c) MNCs can bring advanced techniques of production.
(d) Local businesses earn higher profits as their cost of production becomes nil.
Answer : (c) MNCs can bring advanced techniques of production. 

Question : Read the source given below and answer the following questions—

35-year-old Sushila has spent many years as a worker in garment export industry of Delhi. She was employed as a 'permanent worker' entitled to health insurance, provident fund, over time at a double rate, when Sushila's factory closed in the late 1990s. After searching for a job for six months, she finally got a job 30 km away from where she lives. Even after working in this factory for several years, she is a temporary worker and earns less than half of what she was earning earlier. Sushila leaves her house every morning, seven days a week at 7:30 a.m. and returns at 10 p.m. A day off from work means no wage. She has none of the benefits she used to get earlier. Factories closer to her home have widely fluctuating orders and therefore pay even less.

Answer the following MCQs by choosing the most appropriate option:

(i) The passage given above relates to which of the following options?
(a) Uncertain employment
(b) Rising Competition
(c) Impact of globalization on employment
(d) Transforming Employment scenario
Answer : (d) Transforming Employment scenario

(ii) According to the passage, Sushila’s current employment nature is temporary based on which of the following statements?
(a) She earns less than half of what she was earning earlier.
(b) Sushila leaves her house every morning.
(c) A day off from work means no wage.
(d) Factories closer to her home have widely fluctuating orders
Answer : (c) A day off from work means no wage.

(iii) Companies these days hire most of its employees as temporary employees, so that :
(a) companies can save money.
(b) need not to give social security.
(c) extra output at low cost.
(d) all of the above.
Answer : (d) all of the above.

(iv) “She earns less than half of what she was earning earlier” means the workers are now denied their fair share of benefits brought about by_________.
(a) Liberalisation
(b) Privatisation
(c) Globalisation
(b) None of the above
Answer : (c) Globalisation.

Points to remember for Understanding Economic Development Chapter 04 Globalisation and the Indian Economy

Globalisation is the integration between countries through foreign trade and foreign investment by Multinational Companies (MNCs). In recent years, markets in India have transformed due to globalisation.

Production Across Countries
The early phase of globalisation involved export of raw materials from colonial countries such as India and import of finished products from industrially developed European countries and the USA. But from the middle of the 20th century, things began to change. Some companies became Multinational Corporations (MNCs) as they spread their
economic activities to various parts of the world.

Multinational Corporations (MNCs)
An MNC is a company that owns or controls production in more than one country. MNCs set-up offices and factories for production in regions where they can get cheap labour and other resources, to minimise cost and maximise profit. They sell their finished products globally and also produce the goods and services globally. The production process is divided into small parts and spread out across the globe.

Advantage of Spreading Out
By spreading out production across different countries, the MNCs get the best quality resources at cheap prices. This increases their profit. By spreading the production, the MNCs generate employment opportunities in underdeveloped countries.

Interlinking Production Across Countries
Some ways of interlinking production across countries are
• Foreign Investment It means investment made by a company based in one country (usually anMNC), into a company based in another country. MNCs set-up the production units by setting up factories or offices in the foreign country.
• Partnerships/Joint Venture Sometimes MNCs merged with local companies and produce jointly. In this way, MNCs provide money for additional investments like buying new machines for faster production and bring latest technology for production.
• Local Companies/Mergers/ Takeover MNCs buy local production units or merge with local companies to expand production. For example, Cargill Foods of USA has taken over Parakh Foods in India and has become the largest producer of edible oil in India.
• Contracts to Local Companies MNCs also place orders with small producers for production. The MNC determines the price, quality, delivery and labour conditions for these distant producers, etc.

Foreign Trade and Integration of Markets
Foreign trade is a trade between different countries of the world. It is also called international trade, external trade or inter-regional trade. It consists of imports and exports.
Foreign trade helps in the integration (connection) of markets in the following ways
• Facilitate movement of goods and services between countries.
• Facilitate movement of people, ideas and technology.
• Gives opportunity to producers to sell their products beyond local/domestic markets.
• Buyers get more choice of goods.
• Increased competition among producers so better quality of goods and services can be provided.
An example of foreign trade in India is that how the cheap and better quality of Chinese toys replaced the Indian toys.

Globalisation
It is the process of rapid integration or interconnection between countries by greater foreign investment and great foreign trade. Globalisation causes integration of markets as well as production centres.
In the process of globalisation, MNCs are playing major role.
More and more goods and services, investments and technology are moving among different countries.
Besides the movements of goods, services, investments and technology, countries are connected through the movement of people between them, i.e. migration. This is because
people usually move from one country to another in search of a better life, higher income, better jobs or better education.

Role of IT in Globalisation
Fast improvement in technology during the last 50 years, such as improvements in transportation technology have resulted in much faster delivery of goods across long distances at lower costs. Information and Communication Technology (ICT or IT1) has speed up the communication services across the globe.
Telecommunication facilities (telegraph, telephone, mobile phones, fax) and internet through satellite communication is used to contact one another around the world, to access information instantly and to communicate from remote areas.
An example of this one is a news magazine published for readers in London, which is designed and printed in Delhi by using telecommunication facilities and internet.

Foreign Investment Policy
The policy of foreign investment adopted by the government also affects globalisation to a large extent. It restricts or encourages foreign investment seeing the situation in the country. Trade barrier is one such foreign investment policy.

Trade Barrier
It is a restriction on the free international exchange of goods or services. Tax on imports (called import duty) is an example of a trade barrier. It is called a barrier because some restriction has been set-up. Governments use trade barriers to regulate foreign trade and to decide what kinds of goods and how much of each, should come into the country.
Similarly Quotas are a way of restriction on volume or quantity of goods to be imported or exported.

Restrictions on Foreign Trade
After independence, the Government of India had put barriers on foreign trade and foreign investment, to protect the domestic producers from foreign competition, as the industries were just coming up in 1950s and 1960s. At that time, India allowed imports of only essential items such as machinery, fertilisers, petroleum, etc.

New Economic Policy, 1991
Around 1991, it was felt that Indian producers must compete with producers around the globe, so that they can improve their production and quality of goods and services. Therefore, Government of India in 1991 made some major changes in its foreign investment policy. Liberalisation was one such change.
This decision was supported by powerful international organisations like World Trade Organisation (WTO).

Liberalisation
Removing barriers or restrictions set earlier by the government on foreign trade is known as liberalisation. In India, it refers to the decision to reduce restrictions on imports undertaken by the Government of India in 1991.
With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export.
Now, the government imposes less restrictions than before and is therefore considered to be more liberal.

World Trade Organisation (WTO)
It is an international organisation dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and as freely as possible.
It supported the liberalisation of foreign trade and investment in India.
WTO was started at the initiative of the developed countries.
Its objective is to liberalise international trade and ensure that its members obey its rules. Though WTO is supposed to allow free trade for all the countries, but it is found that the developed countries have unfairly implemented some rules.
They have forced the developing countries to remove barriers from their countries. At the same time, they themselves have restricted imports to their countries or used unfair trade practice to manipulate the market.
An example of this is the trade in agricultural products.
Agriculturists in the USA are heavily subsidised by their government, so that they can export products like wheat and cotton at very low prices to developing countries. This increase competition and adversely affects farmers in these countries.

Impact of Globalisation in India
• Globalisation resulted in more competition among producers (both local and foreign). It gives greater choice of goods with improved quality at lower prices.
• MNCs have increased their investments in India in cell phones, automobiles, electronics, soft drinks, fast food and services such as banking in urban areas.
• Many new jobs have been created and local companies supplying raw materials and services to these industries have prospered.
• Globalisation brings in new and improved technology by which even the local companies benefit.
• Some large Indian compaines like Infosys, TataMotors, Asian Paints, Ranbaxy Infosys (IT), Sundaram Fasteners have emerged asMNCs and set up companies in other countries.
• New companies that provide call centres4, IT related services, accounts and administrative jobs have established.
• Globalisation has threatened small producers as their production has decreased considerably. Producers of small industries like battery, capacitors, plastic toys, tyres, dairy products and vegetable oil are affected due to competition.

Government Steps to Attract Foreign Investment
In recent years, the Central and State Governments in India are taking special steps to attract foreign companies to invest in India. These are
• They have set-up industrial zones, called Special Economic Zones (SEZs). SEZs have world class facilities: electricity, water, roads, transport, storage, recreational and educational facilities.
• Companies who set-up production units in the SEZs do not have to pay taxes for an initial period of five years.
• Government has also allowed flexibility in the labour laws to attract foreign investment.
• The companies in the organised sector have to obey certain rules that aim to protect the workers’ rights.
• Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work. This is done to reduce the cost of labour for the company.

Growing Competition and Uncertain Employment
Globalisation and the pressure of competition have changed the lives of workers. With growing competition, most employers these days prefer flexible employment. This means that workers jobs are no longer secure. For example, in the garment export industry.
Indian garment exporters try to cut their own costs by reducing labour costs, as raw material costs cannot be reduced.
So, they employ workers only on a temporary basis.Workers get very low wages and forced to do overtime to manage their expenses. Even in the organised sector, workers no longer get the protection and benefits that they enjoyed earlier.

The Struggle for a Fair Globalisation
People with education, skill and wealth have made the best use of the new opportunities arised due to globalisation. To make it more ‘fair’, government plays a major role which is
• It ensures that policies such as labour laws are strictly followed.
• It supports and protects small producers from global competition and to improve their performance.
• It negotiates with the WTO to ensure fair rules and concessions for developing countries.
• The government can also use trade and investment barriers to protect the interest of domestic produce.
• Government can also align with other developing countries with similar interests to fight against the authority of developed countries in the WTO