WGU C211 GLOBAL ECONOMICS
PRACTICE EXAM QUESTIONS AND
ANSWERS 2027.
1. Which economic theory suggests that a country should specialize in producing goods for
which it has the lowest opportunity cost?
A. Absolute Advantage
B. Comparative Advantage
C. Mercantilism
D. Product Life Cycle Theory
Answer: B
Conceptual Explanation: Comparative Advantage, proposed by David Ricardo, focuses on
lower opportunity costs rather than just absolute productivity.
2. What is the primary purpose of the International Monetary Fund (IMF)?
A. To provide long-term loans for infrastructure development
B. To resolve trade disputes between member nations
C. To act as a lender of last resort and maintain global monetary stability
D. To eliminate all global tariffs and quotas
,Answer: C
Conceptual Explanation: The IMF focuses on exchange rate stability and providing short-
term loans to countries facing balance-of-payment crises.
3. Which type of legal system is based on a detailed set of written laws and codes?
A. Common Law
B. Theocratic Law
C. Customary Law
D. Civil Law
Answer: D
Conceptual Explanation: Civil law systems rely on comprehensive legal codes, whereas
common law relies more on judicial precedent.
4. In the context of Hofstede’s cultural dimensions, what does ‘Power Distance’ measure?
A. The degree to which individuals are integrated into groups
B. The tolerance for ambiguity and uncertainty
C. The preference for achievement and assertiveness
D. The extent to which less powerful members accept unequal distribution of power
Answer: D
, Conceptual Explanation: Power distance reflects how a society handles inequality and the
authority of those in power.
5. Which of the following describes a ‘Customs Union’?
A. Members allow free movement of labor and capital
B. Members eliminate internal trade barriers but keep individual external policies
C. Members eliminate internal trade barriers and adopt a common external trade policy
D. Members adopt a single currency and unified monetary policy
Answer: C
Conceptual Explanation: A customs union adds a common external tariff to the free trade
area model.
6. What happens to a country’s currency when there is a high rate of inflation relative to
other countries?
A. The currency appreciates in value
B. The currency’s purchasing power increases
C. The exchange rate remains fixed
D. The currency depreciates in value
Answer: D
Conceptual Explanation: Higher inflation reduces the purchasing power of a currency,
typically leading to depreciation in the foreign exchange market.
PRACTICE EXAM QUESTIONS AND
ANSWERS 2027.
1. Which economic theory suggests that a country should specialize in producing goods for
which it has the lowest opportunity cost?
A. Absolute Advantage
B. Comparative Advantage
C. Mercantilism
D. Product Life Cycle Theory
Answer: B
Conceptual Explanation: Comparative Advantage, proposed by David Ricardo, focuses on
lower opportunity costs rather than just absolute productivity.
2. What is the primary purpose of the International Monetary Fund (IMF)?
A. To provide long-term loans for infrastructure development
B. To resolve trade disputes between member nations
C. To act as a lender of last resort and maintain global monetary stability
D. To eliminate all global tariffs and quotas
,Answer: C
Conceptual Explanation: The IMF focuses on exchange rate stability and providing short-
term loans to countries facing balance-of-payment crises.
3. Which type of legal system is based on a detailed set of written laws and codes?
A. Common Law
B. Theocratic Law
C. Customary Law
D. Civil Law
Answer: D
Conceptual Explanation: Civil law systems rely on comprehensive legal codes, whereas
common law relies more on judicial precedent.
4. In the context of Hofstede’s cultural dimensions, what does ‘Power Distance’ measure?
A. The degree to which individuals are integrated into groups
B. The tolerance for ambiguity and uncertainty
C. The preference for achievement and assertiveness
D. The extent to which less powerful members accept unequal distribution of power
Answer: D
, Conceptual Explanation: Power distance reflects how a society handles inequality and the
authority of those in power.
5. Which of the following describes a ‘Customs Union’?
A. Members allow free movement of labor and capital
B. Members eliminate internal trade barriers but keep individual external policies
C. Members eliminate internal trade barriers and adopt a common external trade policy
D. Members adopt a single currency and unified monetary policy
Answer: C
Conceptual Explanation: A customs union adds a common external tariff to the free trade
area model.
6. What happens to a country’s currency when there is a high rate of inflation relative to
other countries?
A. The currency appreciates in value
B. The currency’s purchasing power increases
C. The exchange rate remains fixed
D. The currency depreciates in value
Answer: D
Conceptual Explanation: Higher inflation reduces the purchasing power of a currency,
typically leading to depreciation in the foreign exchange market.
