MCQs – Class 10 Economics Chapter 4: Globalisation and the Indian Economy | CBSE | GPN

🧠 Multiple Choice Questions (MCQs) - Chapter 4: Globalisation and the Indian Economy

This set of 30 questions evaluates your understanding of globalisation, its factors, impact on India, MNCs, WTO, and the debate around fair globalisation as per the CBSE syllabus.

Standard MCQs (1 Mark Each)

Choose the single correct option for questions 1 to 15.

Globalisation means:

(a) Integrating the domestic economy with the world economy

(b) Only importing goods from other countries

(c) Only exporting goods to other countries

(d) Restricting foreign trade

Answer: (a) Integrating the domestic economy with the world economy
Explanation: Globalisation is the process of rapid integration or interconnection between countries through increased foreign trade and foreign investment. It creates a borderless world economy.
MNC stands for:

(a) Multinational Corporation

(b) Multinational Company

(c) Multiple National Companies

(d) Both (a) and (b)

Answer: (d) Both (a) and (b)
Explanation: MNC stands for both Multinational Corporation and Multinational Company. These are companies that own or control production in more than one country through foreign direct investment.
Which of these is a major factor enabling globalisation?

(a) Improvement in transportation technology

(b) Development in information and communication technology

(c) Liberalisation of trade and investment

(d) All of the above

Answer: (d) All of the above
Explanation: Globalisation is driven by multiple factors: technology (faster transport, internet, telecom), trade/investment liberalization (reduced barriers), and political decisions supporting economic integration.
WTO was established in:

(a) 1947

(b) 1995

(c) 2001

(d) 1991

Answer: (b) 1995
Explanation: The World Trade Organization (WTO) was established on 1 January 1995, replacing the General Agreement on Tariffs and Trade (GATT) that was established in 1947.
What is foreign investment?

(a) Investment made by MNCs in a country

(b) Investment made by the government

(c) Investment made by domestic companies

(d) Investment in foreign countries only

Answer: (a) Investment made by MNCs in a country
Explanation: Foreign investment is investment made by MNCs (Multinational Corporations) in a country's production assets, typically to set up factories, offices, or acquire local companies.
Which Indian company was taken over by Cargill Foods, an American MNC?

(a) Parakh Foods

(b) Britannia

(c) Amul

(d) Nestle India

Answer: (a) Parakh Foods
Explanation: Cargill Foods, an American MNC, bought the Indian company Parakh Foods, which had a large marketing network and four oil refineries. This gave Cargill instant access to the Indian market.
What does liberalisation mean in economics?

(a) Removing barriers or restrictions set by the government on foreign trade and investment

(b) Increasing taxes on imports

(c) Restricting foreign companies

(d) Supporting only domestic companies

Answer: (a) Removing barriers or restrictions set by the government on foreign trade and investment
Explanation: Liberalisation involves reducing government regulations and restrictions on economic activities, particularly reducing trade barriers (tariffs, quotas) and opening up to foreign investment.
Which policy in 1991 started the process of globalisation in India?

(a) New Economic Policy

(b) Industrial Policy

(c) Agricultural Policy

(d) Education Policy

Answer: (a) New Economic Policy
Explanation: In 1991, India adopted the New Economic Policy which included liberalisation, privatisation, and globalisation (LPG) reforms, marking the beginning of India's integration with the global economy.
What is the main function of WTO?

(a) To liberalise international trade

(b) To establish rules for international trade

(c) To supervise world trade and settle disputes

(d) All of the above

Answer: (d) All of the above
Explanation: WTO aims to liberalise international trade by establishing trade rules, ensuring countries follow these rules, and providing a platform to settle trade disputes among member countries.
Which of these is a negative effect of globalisation in India?

(a) Greater choice for consumers

(b) Increase in competition

(c) Job losses in small-scale industries

(d) Inflow of foreign investment

Answer: (c) Job losses in small-scale industries
Explanation: While globalisation has benefits, it has also led to closure of many small industries unable to compete with cheaper imports or MNC products, resulting in job losses and increased unemployment.
SEZ stands for:

(a) Special Economic Zone

(b) Special Export Zone

(c) Special Employment Zone

(d) Special Enterprise Zone

Answer: (a) Special Economic Zone
Explanation: SEZ stands for Special Economic Zone - industrial zones with world-class infrastructure and tax benefits to attract foreign investment. Companies in SEZs don't have to pay taxes for initial years.
Why do MNCs set up production in developing countries?

(a) Cheap labour

(b) Availability of raw materials

(c) Large markets

(d) All of the above

Answer: (d) All of the above
Explanation: MNCs invest in developing countries for lower production costs (cheap labour), access to natural resources (raw materials), and to sell in growing local markets (large populations).
What is the main argument against trade barriers?

(a) They increase competition

(b) They protect domestic industries

(c) They increase prices and reduce choice for consumers

(d) They promote exports

Answer: (c) They increase prices and reduce choice for consumers
Explanation: Trade barriers like tariffs make imported goods more expensive, reducing competition. This allows domestic producers to charge higher prices while consumers have fewer choices and pay more.
Which organisation pressured developing countries to liberalise trade?

(a) World Bank

(b) International Monetary Fund (IMF)

(c) World Trade Organization (WTO)

(d) All of the above

Answer: (d) All of the above
Explanation: World Bank, IMF, and WTO (often called the Bretton Woods institutions) have pressured developing countries through loan conditions and trade agreements to adopt liberalisation policies.
Which Indian brand faced competition from Chinese toys in the market?

(a) Gopal

(b) Funskool

(c) Hot Wheels

(d) Barbie

Answer: (a) Gopal
Explanation: Gopal, an Indian toy brand, faced stiff competition from cheaper Chinese toys in the Indian market after liberalisation, illustrating how globalisation affects small domestic producers.

Assertion-Reasoning Questions (1 Mark Each)

Directions: For questions 16 to 25, a statement of Assertion (A) is followed by a statement of Reason (R). Choose the correct option:

(a) Both A and R are true and R is the correct explanation of A

(b) Both A and R are true but R is NOT the correct explanation of A

(d) A is false but R is true

Assertion (A): Information and communication technology has played a major role in globalisation.
Reason (R): Computers, internet, mobile phones and satellites have made communication faster and cheaper across the world.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Technology, especially ICT, enables instant global communication and coordination (R), which is essential for MNCs to manage worldwide operations, driving globalisation as stated in A.
Assertion (A): MNCs can exert strong influence on production in distant locations.
Reason (R): They have huge wealth, advanced technology, and global networks.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: MNCs' financial resources, technology, and worldwide presence (R) give them power to control production globally through investments, partnerships, and supply chains, as stated in A.
Assertion (A): Trade barriers protect domestic industries from foreign competition.
Reason (R): India had imposed barriers to foreign trade and investment to protect producers within the country.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Before 1991, India used trade barriers (tariffs, quotas) to shield domestic industries (R), which is how such barriers function - by making imports costly/unavailable to protect local producers (A).
Assertion (A): Globalisation has created new employment opportunities in services sector.
Reason (R): Growth of IT services, call centres, and BPOs in India is a result of globalisation.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Globalisation enabled outsourcing of services to India (R), creating millions of jobs in IT, BPO, and call centers, demonstrating new employment opportunities mentioned in A.
Assertion (A): Fair globalisation would create opportunities for all.
Reason (R): Government policies must protect the interests of the poor and small producers.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: For globalisation to benefit everyone (fair globalisation in A), governments need policies (like support for small industries, labour laws) to protect vulnerable groups, as explained in R.
Assertion (A): Developing countries have disadvantage in WTO negotiations.
Reason (R): Developed countries are more powerful and can influence WTO decisions in their favor.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Developed countries have greater economic and political power (R), allowing them to shape WTO rules to their advantage, putting developing countries at a disadvantage in negotiations as stated in A.
Assertion (A): Liberalisation has increased competition in Indian market.
Reason (R): Foreign companies can now compete with Indian companies due to removal of trade barriers.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Removing trade barriers (R) allows foreign goods and companies into Indian market, increasing choices and competition for domestic companies, as stated in A.
Assertion (A): MNCs sometimes buy local companies to expand production.
Reason (R): Buying existing companies gives MNCs instant access to established markets and distribution networks.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Instead of building from scratch, MNCs often buy successful local companies (R) to quickly enter new markets with existing customer base and infrastructure, as described in A.
Assertion (A): Globalisation has led to cultural homogenization.
Reason (R): Global brands, food chains, and media have spread similar cultural products worldwide.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: Global brands (McDonald's, Coca-Cola), media (Hollywood), and lifestyles spreading worldwide (R) create more uniform global culture, reducing local diversity as stated in A.
Assertion (A): Workers' rights are often ignored in global supply chains.
Reason (R): MNCs pressure suppliers in developing countries to cut costs, leading to poor working conditions and low wages.
Answer: (a) Both A and R are true and R is the correct explanation of A
Explanation: To offer cheap products, MNCs demand low prices from suppliers (R), who then cut labor costs through poor conditions and low wages, violating workers' rights as stated in A.

Case-Based Questions (1 Mark Each)

For questions 26 to 30, read the case/source carefully and answer.

Case: "An Indian toy manufacturer employed 50 workers making traditional wooden toys. After toy imports were liberalized, cheaper Chinese plastic toys flooded the market. Within a year, the Indian manufacturer had to lay off 30 workers and struggle to survive."
What negative impact of globalisation does this illustrate?

(a) Increased consumer choice

(b) Job losses in traditional industries unable to compete with imports

(c) Technology transfer to India

(d) Improved quality of products

Answer: (b) Job losses in traditional industries unable to compete with imports
Explanation: This shows how removing trade barriers exposes small domestic industries to cheaper imports, leading to business closures and unemployment, particularly affecting traditional sectors.

Case: Study the comparison of two periods in Indian economy:

Aspect	Before 1991	After 1991
Foreign Investment	Restricted	Liberalised
Imports	High tariffs, quotas	Reduced barriers
Consumer Choice	Limited domestic brands	Multiple Indian & foreign brands
Industrial Growth	Licence Raj, slow growth	Faster growth, competition

What major economic shift does this table represent?

(a) Shift from globalisation to protectionism

(b) Shift from protectionism to globalisation through liberalisation

(d) Complete government control of economy

Answer: (b) Shift from protectionism to globalisation through liberalisation
Explanation: The table shows India's transition from a protected, regulated economy (pre-1991) to an open, liberalised economy integrated with global markets through reduced barriers and increased foreign participation.

Case: "A large MNC producing sports shoes has its headquarters in the USA, design centers in Italy, manufacturing units in Vietnam and Indonesia, and sells worldwide. It uses cheap labour in Asia while keeping high-value activities (design, marketing) in developed countries."
What pattern of global production does this demonstrate?

(a) Complete production in one country

(b) Interlinking production across countries based on cost advantages

(c) Only exporting finished products

(d) Avoiding developing countries completely

Answer: (b) Interlinking production across countries based on cost advantages
Explanation: This shows how MNCs divide production processes globally - labor-intensive manufacturing in low-wage countries, while R&D, design, and marketing remain in developed countries to maximize profits.
Case: "Indian software engineers develop applications for American companies, customer service executives in Indian call centers handle UK bank queries, and Indian radiologists analyze medical scans for US hospitals - all made possible by satellite communication and internet."
What aspect of globalisation does this case highlight?

(a) Only trade in goods

(b) Globalisation of services through technology

(c) Decrease in employment opportunities

(d) Negative impact on developed countries

Answer: (b) Globalisation of services through technology
Explanation: This illustrates how technology enables service sector globalisation - services (IT, customer support, medical analysis) can be provided remotely across borders, creating new economic opportunities.
Case: "Farmers in developing countries protest against WTO agreements that allow developed countries to subsidize their agriculture heavily. These subsidies make imported food cheaper than locally grown food, threatening farmers' livelihoods in poor countries."
What issue in global trade rules does this highlight?

(a) Fair competition in agriculture

(b) Unfair trade practices where rich countries protect their farmers while forcing poor countries to open markets

(c) Complete free trade benefits everyone equally

(d) Developing countries have advantage in agriculture

Answer: (b) Unfair trade practices where rich countries protect their farmers while forcing poor countries to open markets
Explanation: This shows the hypocrisy in global trade - developed countries use subsidies to protect their agriculture while demanding developing countries remove protections, creating unequal competition that harms poor farmers.

📘 Final Practice and Mastery Tips

Key concepts: Clearly understand globalisation, liberalisation, MNCs, WTO, and their interrelationships.

Balance perspectives: Learn both positive and negative impacts of globalisation with specific Indian examples.

Chronology: Remember important dates - 1991 reforms, 1995 WTO establishment.

Current examples: Relate concepts to recent events like trade wars, digital globalization, and India's trade policies.

Critical thinking: Develop arguments for and against globalisation, understanding the need for fair globalisation with government intervention.

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