Globalization and Indian Economy For Class 10 Economy Extra Question Answer

Q 1. What is the meaning of the market?

The market is the place where there is a regular gathering of people for the purchase and sale of goods and services.

Q 2. Who are consumers?

A consumer is a person who purchases goods and services for personal use.

Q 3. State the main motive of MNC.

The main motive of the MNC is to earn greater profits.

Q 4. Why are MNCs setting their customer care centres in India?

This is because India has highly skilled engineers who can understand the technical aspects of production and also has educated English speaking youths who can provide customer care services.

Q 5. Define a multinational company.

A multinational company is a company that owns or controls production in more than one nation.

Q 6. Name the major items imported by India.

The major items imported by India are Petroleum, machinery, fertilizers, gold and silver, electronic goods, pearls and precious stones, etc.

Q 7.  Differentiate between investment and foreign investment.

The money that is spent to buy assets such as land, building, machines and other equipment is called investment. Whereas an investment made by MNCs is called foreign Investment.

Q 8. What is meant by ‘foreign investment’?

The investment made by MNCs is called foreign investment.

Q 9. What attracts foreign investment?

Special Economic Zones (SEZs) attract foreign investment.

Q 10. Cargill foods, an MNC has bought over which Indian company?

Cargill Foods has bought over Parakh Foods.

Q 11. What is the most common step taken by the producers to cut production cost?

 The most common step taken by the producers to cut production costs is to reduce labour costs.

Q 12. What is meant by ‘investment’?

The money that is spent to buy assets such as land, building, machines and other equipment is called investment.

Q 13. Which institution has tremendous power to determine price, quality, delivery and labour conditions for distant producers?


Q 14. Write two positive effects of foreign trade.

(i) Foreign Trade creates an opportunity for producers to reach beyond the domestic markets.

(ii) Buyers have more choices of goods as the Market is flooded with both domestic and foreign manufactured goods.

Q 15. Define ‘foreign trade’.

The trade activities between the companies of one nation with another nation are termed Foreign Trade.

Q 16. Why do we trade with the rest of the world?

We trade with the rest of the world because foreign trade creates an opportunity for the producers to reach beyond the domestic arkets and earn greater profits.

Q 17. What will happen if the tax is imposed on Chinese toys?

Chinese toys will be costly and the same level playing field will be provided to both Indian & Chinese toys.

Q 18. What is privatization?

Privatization refers to shifting of the ownership or management of a government-owned enterprise to private ownership.

Q 19. What is meant by trade barriers?

Trade barriers refer to the laws, institutions or practices which make trade between countries more difficult or expensive than trade within countries.

Q 20. Write any two key factors that have enabled globalization.

Technology and liberalisation of foreign trade and foreign investment policy have stimulated the globalization process.

Q 21. When was India’s foreign trade liberalized?

India’s foreign trade was liberalized from around 1991.

Q 22. What is meant by ‘World Trade Organization?

 World Trade Organization (WTO) is one such organization whose aim is to liberalize international trade.

Q 23. What was the main aim to form ‘World Trade Organization?

To liberalize international trade

Q 24. What is meant by ‘Special Economic Zones (SEZ)?

Special Economic Zones are the industrial zones that are being set up by the central and state governments to attract foreign companies to invest in India.

Q 25. Which sector has been benefited the least because of globalization in India?

The unorganized sector benefitted least because of globalization in India.

Q 26. How has globalization raised the competition in the market?

In the process of globalization, the government removes restrictions on imports that raise competition in the market with the MNCs also.

Q 27. Who plays an important role in the struggle for fair globalization?


Q 28.  What are Multi-National Corporations (MNCs)?

Multi-National Corporation (MNC) is a company that owns or controls production in more than one nation. The goods and services are produced globally. The production process is divided into small parts and spread out across the globe.

Q 29. Why is ‘tax’ on imports known as a trade barrier?

 Tax on imports is known as a trade barrier because it increases the price of imported commodities. It is called a barrier because some restriction has been set up.

Q 30. What is meant by ‘fair globalization’?

Fair globalization means globalization that would create opportunities for all and ensure that its benefits are shared better.

Q 31. What do you understand by the term ‘Foreign Direct Investment’?

FDI is the investment of foreign capital in the economic and productive activities of a country by foreign companies or MNCs with the aim of expanding capacity and production to earn profits.

Q 32. Differentiate between investment and foreign investment.

. The money that is spent to buy assets (land, building, machines and other equipment) is called investment, while the investment made by the MNCs is called foreign investment.

Q 33. Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources?

MNCs set up offices and factories for products in regions where they can get cheap labour and other resources so that—

Q 34. Why had the Indian Government put barriers to foreign trade and foreign investment after independence? State any one reason.

The Indian government after independence had put barriers to foreign trade and investment.

  • This was done to protect the producers within the country from foreign competition.
  • To protect the Indian economy from foreign infiltration in industries affecting the economic growth of the country as planned.

Q 35. Explain the role of government to make globalization fair.

The government can play a major role in making fair globalization possible: Fair globalization would create opportunities for all and also ensure that the benefits of globalization are shared better. Government policies must protect the interests not only of the rich and the powerful but also of all the people in the country.

  • Government should ensure that labour laws are implemented and workers’ rights are protected.
  • Government should support small producers to improve their performance till the time they become strong enough to compete with foreign competition.
  • If necessary, the government should use trade and investment barriers.
  • It can negotiate with WTO for fairer rules.
  • It can also align with other developing countries with similar interests to fight against the domination of developed countries in the WTO.

Q 36. Explain any three advantages of globalization.

Globalization means integrating the economy of the country with the world economy.

  • Under this process, goods and services along with capital, resources and technology can move freely from one nation to another.
  • It has increased the movement of people between countries. People usually move from one country to another in search of better income, better jobs or better education. Earlier the movement of people between countries was less due to various restrictions.
  • Rapid improvement in technology has been one major factor that has stimulated the globalization process. For instance, advancement in transportation technology has made much faster delivery of goods across long distances possible at lower costs. Container services have led to a huge reduction in port handling costs. The cost of air transport has fallen which has enabled much greater volumes of goods being transported by airlines.
  • Developments in information and communication technology (IT in short) has brought a revolution in telecommunications. It has made e-banking, e-commerce, e-learning, e-mail and e-governance a reality.
  • Globalization has resulted in greater competition among producers and has been of advantage to consumers, particularly the well-off section. Rich people now enjoy the improved quality and lower prices for several products.

Q 37. What is a trade barrier? Why did the Indian Government put up trade barriers after Independence? Explain.

The restrictions set by the Government to regulate foreign trade are called trade barriers. Tax on imports is an example of a trade barrier.

The Indian Government had put barriers to foreign trade and foreign investment after independence to protect the domestic producers from foreign competition. Imports at that stage would not have allowed local industries to come up. India allowed imports of only essential items such as machinery, fertilizers, petroleum, etc.

Q 38. How do Multinational Companies manage to keep the cost of production of their goods low? Explain with examples.

  • MNCs set up offices and factories for production in regions where they can get cheap labour and other resources. For exampleCountries like China, Bangladesh and India. They also provide the advantage of cheap manufacturing locations.
  • MNCs also need close-by markets for their manufacturing goods. Mexico and Eastern Europe are useful for their closeness to the markets in the US and Europe.
  • Besides these, MNCs also require skilled engineers and IT personnel and a large number of English speaking people who are able to provide customer care services (India possibly tops in this area).
  • All these factors help MNCs in saving costs of production by 50-60%.

Q 39.  How do we participate in the market as producers and consumers? Explain with three examples.

We participate in the market both as producers and consumers.

  • As producers of goods and services we could be working in any of the sectors like agriculture, industry or services. For example, a farmer who sells wheat to a flour mill. The man at the mill grinds the wheat and sells the flour to a biscuit company. The biscuit company uses flour, sugar and oil to make packets of biscuits. It sells the biscuits in the market to the consumer. Biscuits are the final goods, i.e., the goods that reach the consumer and people as consumers buy.
  • We as producers in the market could be made to sell the produce to the moneylender at a low rate in return for a timely loan. For example, in the case of small farmers; the failure of crops often makes loan repayment impossible. They have to sell a part of their land to repay the loans.
  • As consumers we participate in the market when we purchase goods and services that we need. As individual consumers, we often find ourselves in a weak position. Whenever there is a complaint regarding a good or service that had been bought, the seller tries to shift all the responsibility onto the buyer. For example, a long battle had to be fought with court cases to make cigarette Manufacturing companies accept that their product could cause cancer.

Q 40. How are local companies benefitted by collaborating with multinational companies? Explain with examples.

 When local companies enter into a joint venture with MNCs:

  • First, the MNCs provide money for additional investments for faster production.
  • Second, MNCs bring with them the latest technology for enhancing and improving production.
  • Some Indian companies have gained from successful collaborations with foreign companies. Globalization has enabled some companies to emerge as multinationals.
  • Parakh Foods was a small company which has been bought over by a large American

Company — Cargill Foods. Parakh foods had built a large marketing network in various parts of India as a well-reputed brand. Parakh Foods had four oil refineries whose control has now shifted to Cargill. Cargill is now the largest manufacturer of edible oil in India making five million pouches daily.