WGU C211 - Global Economics for Managers, Brian Final Exam
Questions with Verified Answers (Correct Update)
Question 1: 3 views on globalization
Answer: Globalization is when you do business internationally
New, Evolutionary, and Pendulum
Question 2: "New" view on
globalization
Answer: A force sweeping through the world in recent times.
Which view claims that the phenomenon of globalization was initially driven by
the desire of Western economies to exploit their power through multinational
enterprises?
Question 3: "Evolutionary"
view on
globalization
Answer: A long-run historical evolution since the dawn of human history
Question 4: "Pendulum" view
on globalization
Answer: One that swings from one extreme to another from time to time.
Most popular
Question 5: Foreign Direct In- F
vestment (FDI)
Answer: oreign direct investments (FDI) are investments made by one company into
another company that is located in another country.
Question 6: 3 Different political views on FDI
Answer: Radical - radical view is hostile to FDI
Free market - free market view calls for minimum or unrestricted government
restriction in FDI. Leads to a win-win situation for both home and host countries.
Pragmatic nationalism - most countries practice pragmatic nationalism, weighing
the benefits and costs of FDI and only using it when benefits outweigh the costs.
Page 1
,Question 7: What are the
benefits to a
country receiving A
Foreign Direct Investment?
Answer: Capital Inflow
Technology Spillover
Advanced Management Know-How
Job creation
Question 8: What costs exist in a country when they receive Foreign Direct Investment?
Answer: 1. Loss of Sovereignty (power),
2. Adverse ettects on competition (drives domestic firms out of business)
3. Capital outflow
Question 9: Itive dynamics of
How do resources and capabilities influence the compet-
V
a business?
Answer: A firm's resources and capabilities must create value compared to its competition.
A firms resources need to bring:
alue, company resources must create value, patents are an example.
Rarity, the rarer, and more desired the more of an advantage it has.
Imitability, how easy is it to imitate your competition?
Organization, some companies are better at answering challenges from competitors.
Question 10: Classical theories
of international
trade*
Answer: The major theories of international trade that were advanced before the 20th
century, they consist of:
1. Mercantilism,
2. Absolute advantage
3. Comparative advantage
Classic Theory says things don't change, they are static.
Page 2
,Question 11: How does resource similarity
impact competitive dynamics?
Answer: Firms with a high degree of similarity are likely to make similar competitive
decisions.
(Starbuck's instant cottee & McDonald's iced cottee, if one increases the price
because of a cottee shortage the other will likely also)
Question 12: What are modern trade theories of international trade?
Answer: Modern theories account for changes in patterns over time whereas classical
theories are static.
Modern theories include
(1) Product life cycles,
(2) Strategic trade
(3) National competitive advantage or "Diamond"
Question 13: What is the classical theory view
of international
trade regarding
change?
Answer: Static, not changing
Question 14: What is absolute
advantage?
Answer: The economic advantage one nation enjoys that is superior to other nations, which
nation is best at producing a particular good?
Trade can be a win/win
Absolute advantage is achieved when one producer is able to produce a competitive product using
fewer resources, or the same resources in less time.
For example, Smith argued that because of better soil, water, and weather, Portugal enjoyed an
absolute advantage over England in the production of grapes
and wines. And England enjoyed an absolute advantage over Portugal as England
produced more wool. If they trade, they would both benefit. international trade is
not a zero-sum game as suggested by mercantilism. It is a win-win game. there
are net gains from trade based on absolute advantage.
Page 3
, Question 15: Comparative advantage
Answer: The ability of an individual or group to carry out a particular economic activity
(such as making a specific product) more eflciently than another activity.
Comparative advantage is an economy's ability to produce a particular good or
service at a lower opportunity cost than its trading partners.
Hypothetically, say that Michael Jordan could paint his house in eight hours.
In those same eight hours, though, he could also take part in the filming of
a television commercial which would earn him $50,000. By contrast, Jordan's
neighbor Joe could paint the house in 10 hours. In that same period of time, he
could work at a fast-food restaurant and earn $100.
In this example, Joe has a comparative advantage, even though Michael Jordan
could paint the house faster and better. The best trade would be for Michael
Jordan to film a television commercial and pay Joe to paint his house. So long as
Michael Jordan makes the expected $50,000 and Joe earns more than $100, the
trade is a winner. Owing to their diversity of skills, Michael Jordan and Joe would
likely find this to be the best arrangement for their mutual benefit.
Question 16: What is mercantilism?
Answer: It is the first recorded theory.
A theory that suggests that the wealth of the world (gold/sliver) is fixed and that
a nation that exports more and imports less will be richer.
Mercantilism trade theory states that viewed international trade as a zero-sum
game. A nation becomes richer by exporting more than it imports.
Page 4
Questions with Verified Answers (Correct Update)
Question 1: 3 views on globalization
Answer: Globalization is when you do business internationally
New, Evolutionary, and Pendulum
Question 2: "New" view on
globalization
Answer: A force sweeping through the world in recent times.
Which view claims that the phenomenon of globalization was initially driven by
the desire of Western economies to exploit their power through multinational
enterprises?
Question 3: "Evolutionary"
view on
globalization
Answer: A long-run historical evolution since the dawn of human history
Question 4: "Pendulum" view
on globalization
Answer: One that swings from one extreme to another from time to time.
Most popular
Question 5: Foreign Direct In- F
vestment (FDI)
Answer: oreign direct investments (FDI) are investments made by one company into
another company that is located in another country.
Question 6: 3 Different political views on FDI
Answer: Radical - radical view is hostile to FDI
Free market - free market view calls for minimum or unrestricted government
restriction in FDI. Leads to a win-win situation for both home and host countries.
Pragmatic nationalism - most countries practice pragmatic nationalism, weighing
the benefits and costs of FDI and only using it when benefits outweigh the costs.
Page 1
,Question 7: What are the
benefits to a
country receiving A
Foreign Direct Investment?
Answer: Capital Inflow
Technology Spillover
Advanced Management Know-How
Job creation
Question 8: What costs exist in a country when they receive Foreign Direct Investment?
Answer: 1. Loss of Sovereignty (power),
2. Adverse ettects on competition (drives domestic firms out of business)
3. Capital outflow
Question 9: Itive dynamics of
How do resources and capabilities influence the compet-
V
a business?
Answer: A firm's resources and capabilities must create value compared to its competition.
A firms resources need to bring:
alue, company resources must create value, patents are an example.
Rarity, the rarer, and more desired the more of an advantage it has.
Imitability, how easy is it to imitate your competition?
Organization, some companies are better at answering challenges from competitors.
Question 10: Classical theories
of international
trade*
Answer: The major theories of international trade that were advanced before the 20th
century, they consist of:
1. Mercantilism,
2. Absolute advantage
3. Comparative advantage
Classic Theory says things don't change, they are static.
Page 2
,Question 11: How does resource similarity
impact competitive dynamics?
Answer: Firms with a high degree of similarity are likely to make similar competitive
decisions.
(Starbuck's instant cottee & McDonald's iced cottee, if one increases the price
because of a cottee shortage the other will likely also)
Question 12: What are modern trade theories of international trade?
Answer: Modern theories account for changes in patterns over time whereas classical
theories are static.
Modern theories include
(1) Product life cycles,
(2) Strategic trade
(3) National competitive advantage or "Diamond"
Question 13: What is the classical theory view
of international
trade regarding
change?
Answer: Static, not changing
Question 14: What is absolute
advantage?
Answer: The economic advantage one nation enjoys that is superior to other nations, which
nation is best at producing a particular good?
Trade can be a win/win
Absolute advantage is achieved when one producer is able to produce a competitive product using
fewer resources, or the same resources in less time.
For example, Smith argued that because of better soil, water, and weather, Portugal enjoyed an
absolute advantage over England in the production of grapes
and wines. And England enjoyed an absolute advantage over Portugal as England
produced more wool. If they trade, they would both benefit. international trade is
not a zero-sum game as suggested by mercantilism. It is a win-win game. there
are net gains from trade based on absolute advantage.
Page 3
, Question 15: Comparative advantage
Answer: The ability of an individual or group to carry out a particular economic activity
(such as making a specific product) more eflciently than another activity.
Comparative advantage is an economy's ability to produce a particular good or
service at a lower opportunity cost than its trading partners.
Hypothetically, say that Michael Jordan could paint his house in eight hours.
In those same eight hours, though, he could also take part in the filming of
a television commercial which would earn him $50,000. By contrast, Jordan's
neighbor Joe could paint the house in 10 hours. In that same period of time, he
could work at a fast-food restaurant and earn $100.
In this example, Joe has a comparative advantage, even though Michael Jordan
could paint the house faster and better. The best trade would be for Michael
Jordan to film a television commercial and pay Joe to paint his house. So long as
Michael Jordan makes the expected $50,000 and Joe earns more than $100, the
trade is a winner. Owing to their diversity of skills, Michael Jordan and Joe would
likely find this to be the best arrangement for their mutual benefit.
Question 16: What is mercantilism?
Answer: It is the first recorded theory.
A theory that suggests that the wealth of the world (gold/sliver) is fixed and that
a nation that exports more and imports less will be richer.
Mercantilism trade theory states that viewed international trade as a zero-sum
game. A nation becomes richer by exporting more than it imports.
Page 4
