WGU C211 GLOBAL ECONOMICS
COMPREHENSIVE EXAMINATION
QUESTIONS AND ANSWERS.
1. According to the Ricardian model of comparative advantage, what is the primary
determinant of trade patterns between two nations?
A. Difference in total factor productivity and labor costs
B. Relative differences in labor productivity and opportunity costs
C. The abundance of specific natural resources
D. Governmental subsidies and industrial policy
Answer: B
Conceptual Explanation: David Ricardo’s theory focuses on comparative advantage,
which is determined by the relative efficiency (opportunity cost) of producing goods,
rather than absolute advantage.
2. Which economic theory suggests that a nation’s competitiveness depends on four
interrelated factors: factor conditions, demand conditions, related/supporting industries, and
firm strategy?
A. Porter’s Diamond Model
,B. Product Life Cycle Theory
C. Heckscher-Ohlin Theory
D. Mercantilism
Answer: A
Conceptual Explanation: Michael Porter proposed the Diamond Model to explain why
certain nations achieve international success in particular industries based on these four
attributes.
3. In the context of international trade, what characterizes ‘Mercantilism’?
A. Promoting free trade to maximize consumer surplus
B. Encouraging imports to increase the variety of goods
C. Viewing trade as a zero-sum game where a nation must export more than it imports
D. Focusing on the global division of labor
Answer: C
Conceptual Explanation: Mercantilism is an economic philosophy that advocates for
maintaining a trade surplus (exporting more than importing) to accumulate gold and silver.
4. The Heckscher-Ohlin theory argues that comparative advantage arises from differences in:
A. Technological innovation cycles
B. National factor endowments like land, labor, and capital
, C. The size of the domestic market
D. Managerial expertise and corporate structure
Answer: B
Conceptual Explanation: The H-O theory predicts that countries will export goods that
make intensive use of factors that are locally abundant.
5. Which dimension of Hofstede’s cultural framework describes the extent to which less
powerful members of a society accept that power is distributed unequally?
A. Uncertainty Avoidance
B. Individualism vs. Collectivism
C. Power Distance
D. Long-term Orientation
Answer: C
Conceptual Explanation: Power Distance measures how a culture handles inequality and
the hierarchy of power within its institutions and organizations.
6. A ‘Common Law’ system is primarily based on:
A. A comprehensive list of written codes and statutes
B. Religious teachings and traditional scripts
C. Precedents set by previous judicial decisions
COMPREHENSIVE EXAMINATION
QUESTIONS AND ANSWERS.
1. According to the Ricardian model of comparative advantage, what is the primary
determinant of trade patterns between two nations?
A. Difference in total factor productivity and labor costs
B. Relative differences in labor productivity and opportunity costs
C. The abundance of specific natural resources
D. Governmental subsidies and industrial policy
Answer: B
Conceptual Explanation: David Ricardo’s theory focuses on comparative advantage,
which is determined by the relative efficiency (opportunity cost) of producing goods,
rather than absolute advantage.
2. Which economic theory suggests that a nation’s competitiveness depends on four
interrelated factors: factor conditions, demand conditions, related/supporting industries, and
firm strategy?
A. Porter’s Diamond Model
,B. Product Life Cycle Theory
C. Heckscher-Ohlin Theory
D. Mercantilism
Answer: A
Conceptual Explanation: Michael Porter proposed the Diamond Model to explain why
certain nations achieve international success in particular industries based on these four
attributes.
3. In the context of international trade, what characterizes ‘Mercantilism’?
A. Promoting free trade to maximize consumer surplus
B. Encouraging imports to increase the variety of goods
C. Viewing trade as a zero-sum game where a nation must export more than it imports
D. Focusing on the global division of labor
Answer: C
Conceptual Explanation: Mercantilism is an economic philosophy that advocates for
maintaining a trade surplus (exporting more than importing) to accumulate gold and silver.
4. The Heckscher-Ohlin theory argues that comparative advantage arises from differences in:
A. Technological innovation cycles
B. National factor endowments like land, labor, and capital
, C. The size of the domestic market
D. Managerial expertise and corporate structure
Answer: B
Conceptual Explanation: The H-O theory predicts that countries will export goods that
make intensive use of factors that are locally abundant.
5. Which dimension of Hofstede’s cultural framework describes the extent to which less
powerful members of a society accept that power is distributed unequally?
A. Uncertainty Avoidance
B. Individualism vs. Collectivism
C. Power Distance
D. Long-term Orientation
Answer: C
Conceptual Explanation: Power Distance measures how a culture handles inequality and
the hierarchy of power within its institutions and organizations.
6. A ‘Common Law’ system is primarily based on:
A. A comprehensive list of written codes and statutes
B. Religious teachings and traditional scripts
C. Precedents set by previous judicial decisions
