WGU C211 GLOBAL ECONOMICS
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS.
1. Which theory suggests that a country should specialize in producing goods for which it has
the lowest opportunity cost?
A. Absolute Advantage
B. Mercantilism
C. Product Life Cycle Theory
D. Comparative Advantage
Answer: D
Conceptual Explanation: Comparative Advantage, proposed by David Ricardo, focuses on
the lowest opportunity cost rather than absolute efficiency.
2. What is the primary goal of the International Monetary Fund (IMF)?
A. To provide long-term loans for infrastructure development
B. To eliminate all global tariffs
C. To act as a global police force for trade disputes
D. To promote international monetary cooperation and exchange rate stability
,Answer: D
Conceptual Explanation: The IMF focuses on maintaining global monetary stability and
helping countries with balance-of-payment problems.
3. In the VRIO framework, what does the ‘R’ stand for?
A. Resourcefulness
B. Reliability
C. Relevance
D. Rarity
Answer: D
Conceptual Explanation: VRIO stands for Value, Rarity, Imitability, and Organization.
4. Which level of regional economic integration involves a common external trade policy and
the free movement of goods and people, but not a common currency?
A. Common Market
B. Customs Union
C. Free Trade Area
D. Economic Union
Answer: A
, Conceptual Explanation: A Common Market includes the features of a Customs Union plus
the free movement of factors of production (labor and capital).
5. What is a ‘Greenfield Investment’ in the context of FDI?
A. Acquiring an existing firm in a foreign country
B. Establishing a new operation from the ground up in a foreign country
C. Investing only in environmentally friendly companies
D. Merging with a foreign competitor
Answer: B
Conceptual Explanation: Greenfield investments involve building new facilities from
scratch, as opposed to acquisitions.
6. Which of the following describes an ‘Ethnocentric’ staffing policy?
A. Hiring the best people for jobs regardless of nationality
B. Staffing all key management positions with parent-country nationals
C. Staffing host-country nationals in subsidiary management
D. Hiring only from third-party countries
Answer: B
Conceptual Explanation: Ethnocentric staffing relies on parent-country nationals (PCNs)
for key leadership roles abroad.
COMPREHENSIVE EXAM QUESTIONS
AND ANSWERS.
1. Which theory suggests that a country should specialize in producing goods for which it has
the lowest opportunity cost?
A. Absolute Advantage
B. Mercantilism
C. Product Life Cycle Theory
D. Comparative Advantage
Answer: D
Conceptual Explanation: Comparative Advantage, proposed by David Ricardo, focuses on
the lowest opportunity cost rather than absolute efficiency.
2. What is the primary goal of the International Monetary Fund (IMF)?
A. To provide long-term loans for infrastructure development
B. To eliminate all global tariffs
C. To act as a global police force for trade disputes
D. To promote international monetary cooperation and exchange rate stability
,Answer: D
Conceptual Explanation: The IMF focuses on maintaining global monetary stability and
helping countries with balance-of-payment problems.
3. In the VRIO framework, what does the ‘R’ stand for?
A. Resourcefulness
B. Reliability
C. Relevance
D. Rarity
Answer: D
Conceptual Explanation: VRIO stands for Value, Rarity, Imitability, and Organization.
4. Which level of regional economic integration involves a common external trade policy and
the free movement of goods and people, but not a common currency?
A. Common Market
B. Customs Union
C. Free Trade Area
D. Economic Union
Answer: A
, Conceptual Explanation: A Common Market includes the features of a Customs Union plus
the free movement of factors of production (labor and capital).
5. What is a ‘Greenfield Investment’ in the context of FDI?
A. Acquiring an existing firm in a foreign country
B. Establishing a new operation from the ground up in a foreign country
C. Investing only in environmentally friendly companies
D. Merging with a foreign competitor
Answer: B
Conceptual Explanation: Greenfield investments involve building new facilities from
scratch, as opposed to acquisitions.
6. Which of the following describes an ‘Ethnocentric’ staffing policy?
A. Hiring the best people for jobs regardless of nationality
B. Staffing all key management positions with parent-country nationals
C. Staffing host-country nationals in subsidiary management
D. Hiring only from third-party countries
Answer: B
Conceptual Explanation: Ethnocentric staffing relies on parent-country nationals (PCNs)
for key leadership roles abroad.
