WGU C211 - Global Economics for Managers
Latest Update Comprehensive Questions
with Approved Answers
"Evolutionary" view on globalization - Answer -A long-run historical evolution since the dawn of
human history
"New" view on globalization - Answer -A force sweeping through the world in recent times.
"Pendulum" view on globalization - Answer -One that swings from one extreme to another from
time to time
3 types of elasticity, their equations, purpose and outcomes - Answer -(1) Price elasticity of
demand - % chg in Q D / % chg in P
(2) Income elasticity - % chg in Q D / % chg in income
(3) Cross-price elasticity - % chg in Q D Good 1/% chg in Good #2 P
Absolute advantage - Answer -The economic advantage one nation enjoys that is superior to other
nations
Benefits to a country receiving FDI - Answer -Capital Inflow, Technology Spillover, Advanced
Management Know-How, Job creation
Budget constraint - Answer -The consumption bundles that the consumer can afford.
Civil law - Answer -Law that uses comprehensive statutes and codes as a primary means to form
legal judgments.
Classical theories of international trade - Answer -Mercantilism, Absolute advantage, and
Comparative advantage
Classical theory view - Answer -Static
Cognitive pillar - Answer -The internalized, taken-for-granted values and beliefs that guide
behavior. (beliefs between right/wrong)
Command economy - Answer -One that is defined by a government taking all factors of production
to be government-owned or state-owned, and all supply, demand, and pricing are planned by the
government.
Common law - Answer -Law shaped by precedents and traditions from previous judicial decisions.
Comparative advantage - Answer -The advantage one economic activity nation enjoys in
comparison with other nations (relative, not absolute)
, Consumer surplus - Answer -The amount a buyer is willing to pay for a good minus the amount the
buyer actually pays for it
Costs to a country receiving FDI - Answer -Loss of Sovereignty, Adverse effects on competition,
Capital outflow.
Cross-price elasticity - Answer -A measure of how much the quantity demanded of one good
responds to a change in the price of another good. Computed as the percentage change in quantity
demanded of the first good divided by the percentage change in price of the second good.
Substitutes=positive cross-price elasticity; complements=negative cross-price elasticity.
Currency hedging - Answer -A way to protect traders and investors from being exposed to the
fluctuations of the spot rate
Dead weight loss. - Answer -The fall in total surplus that results from a market distortion, such as a
tax (new equilibrium price that is settled for the transaction will be higher and therefore some burden of
this will be passed on to the consumer)
Demand curve for a monopolistic market - Answer -Downward-sloping
Demand curve for a perfectly competitive firm - Answer -Horizontal line
Democracy - Answer -Citizens elect representatives to govern the country on their behalf.
Describe the basic distinctions between the market models with respect to: number of market
participants, type of product being marketed, ease of entry/exit into the market and the prevalence of
advertising/marketing - Answer -Monopoly and Oligopoly have one to few firms, with limited
products (cable TV), entry is difficult, and advertising is a natural feature. Monopolistic
competition/perfect competition have many firms, mono comp has differentiated products
(novels/movies) and perfect comp has identical products, entry is easy, and spend very little on
advertising.
Discount rate - Answer -The interest rate banks pay when borrowing from the Federal Reserve.
Elastic - Answer -Quantity moves proportionately more than the price (Price increase results in
drastically lower demand).
Equity - Answer -indicative of relatively larger, harder-to-reverse commitments. Determines firms
MNE status.
Explain how the price of related goods is related to changes in the demand curve? - Answer -When
a fall in the price of one good reduces the demand for another good, the two goods are called
substitutes (yogurt for ice cream).
When a fall in the price of one good raises the demand for another good, the two goods are called
complements (hot fudge and ice cream).
Explain the effect an income change might have on shifting the demand curve? - Answer -Lower
income=less to spend in total=lower demand.
Latest Update Comprehensive Questions
with Approved Answers
"Evolutionary" view on globalization - Answer -A long-run historical evolution since the dawn of
human history
"New" view on globalization - Answer -A force sweeping through the world in recent times.
"Pendulum" view on globalization - Answer -One that swings from one extreme to another from
time to time
3 types of elasticity, their equations, purpose and outcomes - Answer -(1) Price elasticity of
demand - % chg in Q D / % chg in P
(2) Income elasticity - % chg in Q D / % chg in income
(3) Cross-price elasticity - % chg in Q D Good 1/% chg in Good #2 P
Absolute advantage - Answer -The economic advantage one nation enjoys that is superior to other
nations
Benefits to a country receiving FDI - Answer -Capital Inflow, Technology Spillover, Advanced
Management Know-How, Job creation
Budget constraint - Answer -The consumption bundles that the consumer can afford.
Civil law - Answer -Law that uses comprehensive statutes and codes as a primary means to form
legal judgments.
Classical theories of international trade - Answer -Mercantilism, Absolute advantage, and
Comparative advantage
Classical theory view - Answer -Static
Cognitive pillar - Answer -The internalized, taken-for-granted values and beliefs that guide
behavior. (beliefs between right/wrong)
Command economy - Answer -One that is defined by a government taking all factors of production
to be government-owned or state-owned, and all supply, demand, and pricing are planned by the
government.
Common law - Answer -Law shaped by precedents and traditions from previous judicial decisions.
Comparative advantage - Answer -The advantage one economic activity nation enjoys in
comparison with other nations (relative, not absolute)
, Consumer surplus - Answer -The amount a buyer is willing to pay for a good minus the amount the
buyer actually pays for it
Costs to a country receiving FDI - Answer -Loss of Sovereignty, Adverse effects on competition,
Capital outflow.
Cross-price elasticity - Answer -A measure of how much the quantity demanded of one good
responds to a change in the price of another good. Computed as the percentage change in quantity
demanded of the first good divided by the percentage change in price of the second good.
Substitutes=positive cross-price elasticity; complements=negative cross-price elasticity.
Currency hedging - Answer -A way to protect traders and investors from being exposed to the
fluctuations of the spot rate
Dead weight loss. - Answer -The fall in total surplus that results from a market distortion, such as a
tax (new equilibrium price that is settled for the transaction will be higher and therefore some burden of
this will be passed on to the consumer)
Demand curve for a monopolistic market - Answer -Downward-sloping
Demand curve for a perfectly competitive firm - Answer -Horizontal line
Democracy - Answer -Citizens elect representatives to govern the country on their behalf.
Describe the basic distinctions between the market models with respect to: number of market
participants, type of product being marketed, ease of entry/exit into the market and the prevalence of
advertising/marketing - Answer -Monopoly and Oligopoly have one to few firms, with limited
products (cable TV), entry is difficult, and advertising is a natural feature. Monopolistic
competition/perfect competition have many firms, mono comp has differentiated products
(novels/movies) and perfect comp has identical products, entry is easy, and spend very little on
advertising.
Discount rate - Answer -The interest rate banks pay when borrowing from the Federal Reserve.
Elastic - Answer -Quantity moves proportionately more than the price (Price increase results in
drastically lower demand).
Equity - Answer -indicative of relatively larger, harder-to-reverse commitments. Determines firms
MNE status.
Explain how the price of related goods is related to changes in the demand curve? - Answer -When
a fall in the price of one good reduces the demand for another good, the two goods are called
substitutes (yogurt for ice cream).
When a fall in the price of one good raises the demand for another good, the two goods are called
complements (hot fudge and ice cream).
Explain the effect an income change might have on shifting the demand curve? - Answer -Lower
income=less to spend in total=lower demand.
