WGU C211 Global Economics For Managers
Questions And Answers (Test Bank)
Globalization can be viewed as: - 1. a new force sweeping through the world in recent times.
2. a long-run historical evolution since the dawn of human history.
3. a pendulum that swings from one extreme to another from time to time.
Which are the three views of globalization? - A recent force, a long-running evolution, and a
pendulum
An import quota is: - restriction on the quantity of imports that can be brought into a country.
Examples of nontariff trade barrier (NTB) - Import quotas
Local content requirements
Subsidies
Free trade is defined as: - The idea that market forces should determine how much to trade with
little or no government intervention.
political argument against free trade - Consumer protection
National security
Environmental and social responsibility
To express its opposition to the political regime in Myanmar, the United States has banned the
importation of jade and other gemstones from that country. This is an example of a - trade embargo
The primary political views on FDI are: - Free market and pragmatic nationalism
Firms can increase their chances of success with FDI by - 1. assessing whether FDI is justified, in
light of other options.
2. understanding that political realities either facilitate or constrain FDI.
,3. leveraging OLI advantages in a way that is valuable, unique, and hard to imitate by rival firms.
How do firms create value when engaging rivals - 1. Secure patents on key products.
2. All of these
3. Launch products in multiple markets.
4. Hold a dominant position in key markets.
The theory of comparative advantage was advocated by - David Ricardo
The modern trade theories include the following - 1. Theory of product life cycle
2. Theory of national competitive advantage of industries
3. Theory of strategic trade
The theory of mercantilism - views international trade as a zero-sum game.
According to the theory of absolute advantage, under free trade - each nation gains by specializing
in economic activities in which a nation has absolute advantage
comparative advantage - the ability to produce a good at a lower opportunity cost than another
producer
Absolute Advantage - The economic advantage one nation enjoys that is absolutely superior to
other nations.
Strategic trade theory - A theory that suggests that strategic intervention by governments in certain
industries can enhance their odds for international success.
Product life cycle theory - A theory that accounts for changes in the patterns of trade over time by
focusing on product life cycles.
The three modern theories of international trade - 1. product life cycle
,2. strategic trade
3. national competitive advantage of industries.
Base of the pyramid (BOP) - Economies where people make less than $2,000 per capita per year.
BRICA - Brazil, Russia, India, and China.
Emerging economies - term that has gradually replaced the term "developing countries" since the
1990s.
Emerging markets - A term that is often used interchangeably with "emerging economies."
Expatriate manager - A manager who works abroad, or "expat" for short.
Foreign direct investment (FDI) - Investment in, controlling, and managing value-added activities in
other countries.
Global Business - Business around the globe.
Globalization - The close integration of countries and peoples of the world.
Gross domestic product (GDP) - The sum of value added by resident firms, households, and
governments operating in an economy.
Gross national income (GNI) - GDP plus income from non-resident sources abroad. The term used
by the World Bank and other international organizations to supersede the term GNP.
Gross national product (GNP) - GDP plus income from non-resident sources abroad
Group of 20 (G-20) - The group of 19 major countries plus the European Union (EU) whose leaders
meet on a biannual basis to solve global economic problems.
, International business (IB) - (1) A business (or firm) that engages in international (cross-border)
economic activities and/or (2) the action of doing business abroad.
International premium - A significant pay raise when working overseas.
Liability of foreignness - The inherent disadvantage that foreign firms experience in host countries
because of their non-native status.
Multinational enterprise (MNE) - A firm that engages in foreign direct investment (FDI).
Nongovernmental organization (NGO) - An organization that is not affiliated with governments.
Purchasing power parity (PPP) - A conversion that determines the equivalent amount of goods and
services that different currencies can purchase.
Reverse innovation - An innovation that is adopted first in emerging economies and is then diffused
around the world.
Risk management - The identification and assessment of risks and the preparation to minimize the
impact of high-risk, unfortunate events.
Scenario planning - A technique to prepare and plan for multiple scenarios (either high or low risk).
Semiglobalization - A perspective that suggests that barriers to market integration at borders are
high, but not high enough to insulate countries from each other completely.
Triad - North America, Western Europe, and Japan.
Purchasing power parity (PPP) - adjustment made to the GDP to reflect differences in the cost of
living
Questions And Answers (Test Bank)
Globalization can be viewed as: - 1. a new force sweeping through the world in recent times.
2. a long-run historical evolution since the dawn of human history.
3. a pendulum that swings from one extreme to another from time to time.
Which are the three views of globalization? - A recent force, a long-running evolution, and a
pendulum
An import quota is: - restriction on the quantity of imports that can be brought into a country.
Examples of nontariff trade barrier (NTB) - Import quotas
Local content requirements
Subsidies
Free trade is defined as: - The idea that market forces should determine how much to trade with
little or no government intervention.
political argument against free trade - Consumer protection
National security
Environmental and social responsibility
To express its opposition to the political regime in Myanmar, the United States has banned the
importation of jade and other gemstones from that country. This is an example of a - trade embargo
The primary political views on FDI are: - Free market and pragmatic nationalism
Firms can increase their chances of success with FDI by - 1. assessing whether FDI is justified, in
light of other options.
2. understanding that political realities either facilitate or constrain FDI.
,3. leveraging OLI advantages in a way that is valuable, unique, and hard to imitate by rival firms.
How do firms create value when engaging rivals - 1. Secure patents on key products.
2. All of these
3. Launch products in multiple markets.
4. Hold a dominant position in key markets.
The theory of comparative advantage was advocated by - David Ricardo
The modern trade theories include the following - 1. Theory of product life cycle
2. Theory of national competitive advantage of industries
3. Theory of strategic trade
The theory of mercantilism - views international trade as a zero-sum game.
According to the theory of absolute advantage, under free trade - each nation gains by specializing
in economic activities in which a nation has absolute advantage
comparative advantage - the ability to produce a good at a lower opportunity cost than another
producer
Absolute Advantage - The economic advantage one nation enjoys that is absolutely superior to
other nations.
Strategic trade theory - A theory that suggests that strategic intervention by governments in certain
industries can enhance their odds for international success.
Product life cycle theory - A theory that accounts for changes in the patterns of trade over time by
focusing on product life cycles.
The three modern theories of international trade - 1. product life cycle
,2. strategic trade
3. national competitive advantage of industries.
Base of the pyramid (BOP) - Economies where people make less than $2,000 per capita per year.
BRICA - Brazil, Russia, India, and China.
Emerging economies - term that has gradually replaced the term "developing countries" since the
1990s.
Emerging markets - A term that is often used interchangeably with "emerging economies."
Expatriate manager - A manager who works abroad, or "expat" for short.
Foreign direct investment (FDI) - Investment in, controlling, and managing value-added activities in
other countries.
Global Business - Business around the globe.
Globalization - The close integration of countries and peoples of the world.
Gross domestic product (GDP) - The sum of value added by resident firms, households, and
governments operating in an economy.
Gross national income (GNI) - GDP plus income from non-resident sources abroad. The term used
by the World Bank and other international organizations to supersede the term GNP.
Gross national product (GNP) - GDP plus income from non-resident sources abroad
Group of 20 (G-20) - The group of 19 major countries plus the European Union (EU) whose leaders
meet on a biannual basis to solve global economic problems.
, International business (IB) - (1) A business (or firm) that engages in international (cross-border)
economic activities and/or (2) the action of doing business abroad.
International premium - A significant pay raise when working overseas.
Liability of foreignness - The inherent disadvantage that foreign firms experience in host countries
because of their non-native status.
Multinational enterprise (MNE) - A firm that engages in foreign direct investment (FDI).
Nongovernmental organization (NGO) - An organization that is not affiliated with governments.
Purchasing power parity (PPP) - A conversion that determines the equivalent amount of goods and
services that different currencies can purchase.
Reverse innovation - An innovation that is adopted first in emerging economies and is then diffused
around the world.
Risk management - The identification and assessment of risks and the preparation to minimize the
impact of high-risk, unfortunate events.
Scenario planning - A technique to prepare and plan for multiple scenarios (either high or low risk).
Semiglobalization - A perspective that suggests that barriers to market integration at borders are
high, but not high enough to insulate countries from each other completely.
Triad - North America, Western Europe, and Japan.
Purchasing power parity (PPP) - adjustment made to the GDP to reflect differences in the cost of
living
