WGU C211 GLOBAL ECONOMICS
COMPREHENSIVE QUESTIONS AND
ANSWERS.
1. Which economic theory suggests that a nation’s wealth is determined by the amount of
precious metals (gold and silver) it possesses?
A. Absolute Advantage
B. Comparative Advantage
C. Mercantilism
D. Product Life Cycle
Answer: C
Conceptual Explanation: Mercantilism is the oldest trade theory, focusing on
accumulating gold and silver by maintaining trade surpluses.
2. What is the primary difference between a ‘Free Trade Area’ and a ‘Customs Union’?
A. A Customs Union allows for the free movement of labor.
B. A Free Trade Area adopts a common external tariff policy.
C. A Free Trade Area uses a common currency.
D. A Customs Union adopts a common external tariff policy toward non-members.
,Answer: D
Conceptual Explanation: While both remove internal trade barriers, a Customs Union
additionally requires members to set the same tariffs for trade with non-members.
3. In the OLI framework of Foreign Direct Investment, what does ‘O’ stand for?
A. Operational Advantage
B. Organizational Advantage
C. Outsourcing Advantage
D. Ownership Advantage
Answer: D
Conceptual Explanation: The OLI framework stands for Ownership, Location, and
Internalization advantages.
4. Which type of legal system is based on religious teachings?
A. Theocratic Law
B. Civil Law
C. Common Law
D. Statutory Law
Answer: A
, Conceptual Explanation: Theocratic law is a legal system based on religious texts or
teachings, such as Islamic Sharia law.
5. A firm that expands into a foreign country to perform the same activities it does at home is
engaging in:
A. Vertical FDI
B. Direct Exporting
C. Conglomerate FDI
D. Horizontal FDI
Answer: D
Conceptual Explanation: Horizontal FDI occurs when a firm duplicates its home country-
based activities at the same value chain stage in a host country.
6. Which organization was established in 1944 to promote international monetary
cooperation and provide temporary financial assistance?
A. World Trade Organization (WTO)
B. International Monetary Fund (IMF)
C. United Nations
D. World Bank
Answer: B
COMPREHENSIVE QUESTIONS AND
ANSWERS.
1. Which economic theory suggests that a nation’s wealth is determined by the amount of
precious metals (gold and silver) it possesses?
A. Absolute Advantage
B. Comparative Advantage
C. Mercantilism
D. Product Life Cycle
Answer: C
Conceptual Explanation: Mercantilism is the oldest trade theory, focusing on
accumulating gold and silver by maintaining trade surpluses.
2. What is the primary difference between a ‘Free Trade Area’ and a ‘Customs Union’?
A. A Customs Union allows for the free movement of labor.
B. A Free Trade Area adopts a common external tariff policy.
C. A Free Trade Area uses a common currency.
D. A Customs Union adopts a common external tariff policy toward non-members.
,Answer: D
Conceptual Explanation: While both remove internal trade barriers, a Customs Union
additionally requires members to set the same tariffs for trade with non-members.
3. In the OLI framework of Foreign Direct Investment, what does ‘O’ stand for?
A. Operational Advantage
B. Organizational Advantage
C. Outsourcing Advantage
D. Ownership Advantage
Answer: D
Conceptual Explanation: The OLI framework stands for Ownership, Location, and
Internalization advantages.
4. Which type of legal system is based on religious teachings?
A. Theocratic Law
B. Civil Law
C. Common Law
D. Statutory Law
Answer: A
, Conceptual Explanation: Theocratic law is a legal system based on religious texts or
teachings, such as Islamic Sharia law.
5. A firm that expands into a foreign country to perform the same activities it does at home is
engaging in:
A. Vertical FDI
B. Direct Exporting
C. Conglomerate FDI
D. Horizontal FDI
Answer: D
Conceptual Explanation: Horizontal FDI occurs when a firm duplicates its home country-
based activities at the same value chain stage in a host country.
6. Which organization was established in 1944 to promote international monetary
cooperation and provide temporary financial assistance?
A. World Trade Organization (WTO)
B. International Monetary Fund (IMF)
C. United Nations
D. World Bank
Answer: B
