Page 123 - Understanding Economics for Class 10
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2.  What are SEZs?
                         Ans.  Special Economic Zones (SEZ) is an area in a country that is subject to different economic
                              regulations than other regions within the same country. These regulations tend to be conducive
                              to foreign direct investment.
               Goyal Brothers Prakashan
                              SEZs are to 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 5 years.

                            3.  Differentiate between investment and foreign investment.
                         Ans.  The money that is spending to buy assets (land, building, machines and other equipment)
                              is called investment, while the investment made by the MNCs is called foreign investment.
                              In investment, the money flows within the country where as in foreign investment money
                              flows outside the country.

                            4.  How has globalisation benefited well-of buyers?
                         Ans.  The main interest areas or the industries in which MNCs are interested are: cell phones,
                              automobiles, electronics, soft drinks, fast food or services such as banking in urban areas.
                              These products are mainly demanded by well-off buyers. There is greater choice before these
                              consumers who now enjoy improved quality and lower prices for several products.  As a
                              result, these people today, enjoy much higher standards of living than was possible earlier.

                            5.  Describe the impact of flexibility of labour laws on the workers in India.
                         Ans.  To attract foreign investment, labour laws were made flexible. It was mainly done to reduce
                              the labour cost and hence the total cost of production.  Lives of workers have substantially
                              changed due to flexible labour laws and the pressure of competition.
                              Workers’ jobs are no longer secure, most employers  prefer to employ  workers ‘flexibly’.
                              Workers do not get any extra benefit like paid holiday, medical expenses etc. they do not
                              get their fair share of globalisation.

                            6.  How do MNCs interlink production across countries. Explain with example
                         Ans.  A MNC is a  company that  owns or controls  production  in  more  than  one  nation.  MNCs
                              interlink production in the following ways:
                               (i)  Offices and factories are set up by MNCs where they can get cheap labour and other resources
                                  for the purpose of production. This is done to reduce the cost and increase the profits.
                               (ii)  MNCs make  investment  by buying up local  companies  and then  expand  production.
                                  This is the most common route of making investments by MNCs. It is easy for huge
                                  companies to do so.
                              (iii)  Example: A very large American MNC, Cargill Foods, has bought over smaller Indian
                                  companies such as Parakh Foods. A large marketing network is built by Parakh Foods
                                  in various parts of India, where its brand was well-reputed.

                            7.  How has globalisation affected the lives of Indians?
                         Ans.  Globalisation has affected the lives of Indian in many ways:
                               (i)  Living standard of people has raised specially well-off sections in the urban areas.
                               (ii)  Consumers have wider choices now.
                              (iii)  Goods are available at lower prices and are of better quality due to increased competition
                              (iv)  New job opportunities have been created for Indian companies particularly in providing
                                  services like IT.
                               (v)  A host of services such as data entry, accounting, engineering etc are now performed
                                  at lesser cost in India.
                              (vi)  Lives of workers have substantially changed due to globalisation and the pressure of competition.

            Economics  Class X                                                                                    E-109
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