WGU C211 OA EXAM Q&A 2026 STUDY GUIDE
WITH VERIFIED SOLUTIONS
◉ Strategic Trade Policy. Answer: Government policy that provides
companies a strategic advantage in international trade through
subsidies and other supports.
◉ Strategic Trade Theory. Answer: A theory that suggests that
strategic intervention by governments in certain industries can
enhance their odds for international success.
◉ Subsidy. Answer: Government payment to domestic firms.
◉ Tariff Barrier. Answer: Trade barrier that relies on tariffs to
discourage imports.
◉ The Theory of Absolute Advantage. Answer: A theory that
suggests that under free trade, a nation gains by specializing in
economic activities in which it has an absolute advantage.
◉ The Theory of Comparative Advantage. Answer: A theory that
focuses on the relative (not absolute) advantage in one economic
activity that one nation enjoys in comparison with other nations.
,◉ The Theory of Mercantilism. Answer: A theory that suggests that
the wealth of the world is fixed and that a nation that exports more
and imports less will be richer.
◉ Theory of National Competitive Advantage of Industries ("The
Diamond Theory"). Answer: A theory that suggests that the
competitive advantage of certain industries in different nations
depends on four aspects that form a "diamond."
◉ Trade Deficit. Answer: An economic condition in which a nation
imports more than it exports.
◉ Trade Embargo. Answer: Politically motivated trade sanctions
against foreign countries to signal displeasure.
◉ Trade Surplus. Answer: An economic condition in which a nation
exports more than it imports.
◉ Voluntary Export Constraint (VER). Answer: An international
agreement that shows that exporting countries voluntarily agree to
restrict their exports.Agglomeration: Clustering of economic
activities in certain locations.
◉ Bargaining Power. Answer: Ability to extract favorable outcome
from negotiations due to one party's strengths.
,◉ Demonstration Effect. Answer: The reaction of local firms to rise
to the challenge demonstrated by MNEs through learning and
imitation.
◉ Dissemination Risk. Answer: The risk associated with
unauthorized diffusion of firm-specific know-how.
◉ Downstream Vertical FDI. Answer: A type of vertical FDI in which
a firm engages in a downstream stage of the value chain in a host
country.
◉ Expropriation. Answer: Government's confiscation of foreign
assets.
◉ FDI Flow. Answer: The amount of FDI moving in a given period
(usually a year) in a certain direction.
◉ FDI Inflow. Answer: Inbound FDI moving into a country in a year.
◉ FDI Outflow. Answer: Outbound FDI moving out of a country in a
year.
, ◉ FDI Stock. Answer: Total accumulation of inbound FDI in a
country or outbound FDI from a country across a given period
(usually several years).
◉ Foreign Portfolio Investment (FPI). Answer: Investment in a
portfolio of foreign securities such as stocks and bonds.
◉ Free Market View. Answer: A political view that suggests that FDI
unrestricted by government intervention is the best.
◉ Horizontal FDI. Answer: A type of FDI in which a firm duplicates
its home country-based activities at the same value chain stage in a
host country.
◉ Knowledge Spillover. Answer: Knowledge diffused from one firm
to others among closely located firms.
◉ Internalization. Answer: The replacement of cross-border
markets (such as exporting and importing) with one firm (the MNE)
locating and operating in two or more countries.
◉ Intrafirm Trade. Answer: International transactions between two
subsidiaries in two countries controlled by the same MNE.
WITH VERIFIED SOLUTIONS
◉ Strategic Trade Policy. Answer: Government policy that provides
companies a strategic advantage in international trade through
subsidies and other supports.
◉ Strategic Trade Theory. Answer: A theory that suggests that
strategic intervention by governments in certain industries can
enhance their odds for international success.
◉ Subsidy. Answer: Government payment to domestic firms.
◉ Tariff Barrier. Answer: Trade barrier that relies on tariffs to
discourage imports.
◉ The Theory of Absolute Advantage. Answer: A theory that
suggests that under free trade, a nation gains by specializing in
economic activities in which it has an absolute advantage.
◉ The Theory of Comparative Advantage. Answer: A theory that
focuses on the relative (not absolute) advantage in one economic
activity that one nation enjoys in comparison with other nations.
,◉ The Theory of Mercantilism. Answer: A theory that suggests that
the wealth of the world is fixed and that a nation that exports more
and imports less will be richer.
◉ Theory of National Competitive Advantage of Industries ("The
Diamond Theory"). Answer: A theory that suggests that the
competitive advantage of certain industries in different nations
depends on four aspects that form a "diamond."
◉ Trade Deficit. Answer: An economic condition in which a nation
imports more than it exports.
◉ Trade Embargo. Answer: Politically motivated trade sanctions
against foreign countries to signal displeasure.
◉ Trade Surplus. Answer: An economic condition in which a nation
exports more than it imports.
◉ Voluntary Export Constraint (VER). Answer: An international
agreement that shows that exporting countries voluntarily agree to
restrict their exports.Agglomeration: Clustering of economic
activities in certain locations.
◉ Bargaining Power. Answer: Ability to extract favorable outcome
from negotiations due to one party's strengths.
,◉ Demonstration Effect. Answer: The reaction of local firms to rise
to the challenge demonstrated by MNEs through learning and
imitation.
◉ Dissemination Risk. Answer: The risk associated with
unauthorized diffusion of firm-specific know-how.
◉ Downstream Vertical FDI. Answer: A type of vertical FDI in which
a firm engages in a downstream stage of the value chain in a host
country.
◉ Expropriation. Answer: Government's confiscation of foreign
assets.
◉ FDI Flow. Answer: The amount of FDI moving in a given period
(usually a year) in a certain direction.
◉ FDI Inflow. Answer: Inbound FDI moving into a country in a year.
◉ FDI Outflow. Answer: Outbound FDI moving out of a country in a
year.
, ◉ FDI Stock. Answer: Total accumulation of inbound FDI in a
country or outbound FDI from a country across a given period
(usually several years).
◉ Foreign Portfolio Investment (FPI). Answer: Investment in a
portfolio of foreign securities such as stocks and bonds.
◉ Free Market View. Answer: A political view that suggests that FDI
unrestricted by government intervention is the best.
◉ Horizontal FDI. Answer: A type of FDI in which a firm duplicates
its home country-based activities at the same value chain stage in a
host country.
◉ Knowledge Spillover. Answer: Knowledge diffused from one firm
to others among closely located firms.
◉ Internalization. Answer: The replacement of cross-border
markets (such as exporting and importing) with one firm (the MNE)
locating and operating in two or more countries.
◉ Intrafirm Trade. Answer: International transactions between two
subsidiaries in two countries controlled by the same MNE.
