WGU D116: GLOBAL BUSINESS
COMPREHENSIVE EXAM PREP
QUESTIONS AND ANSWERS | 100%
VERIFIED– PASS GUARANTEED – A+
GRADED 2026/2027
1. According to the Heckscher-Ohlin theory, which factor primarily determines the goods a
country will export?
A. The level of government subsidies provided to infant industries
B. The first-mover advantages gained by domestic firms
C. The absolute technological superiority in a specific product category
D. The relative abundance of factors of production like land, labor, and capital
Answer: D
Conceptual Explanation: Heckscher-Ohlin theory posits that countries will export goods
that make intensive use of factors that are locally abundant.
2. Which component of the OLI framework explains why a firm would prefer FDI over
licensing to protect its proprietary technology?
A. Internalization advantages
B. Location advantages
,C. Ownership advantages
D. Operational advantages
Answer: A
Conceptual Explanation: Internalization theory (the ‘I’ in OLI) suggests firms use FDI to
maintain control over specialized knowledge and avoid the risks of licensing.
3. A company produces a high-end medical device in the US and sells it globally. As the
product matures and competitors emerge, production moves to lower-cost locations. This
follows which theory?
A. International Product Life Cycle
B. New Trade Theory
C. Comparative Advantage
D. Mercantilism
Answer: A
Conceptual Explanation: Raymond Vernon’s theory suggests that as products mature,
both the location of sales and the optimal production location will change.
4. If the spot exchange rate for the Euro is $1.10 and the 90-day forward rate is $1.15, the
Euro is said to be trading at a:
A. Forward premium
B. Forward discount
, C. Liquidity trap
D. Floating peg
Answer: A
Conceptual Explanation: A forward premium occurs when the forward rate is higher than
the spot rate, indicating the market expects the currency to appreciate.
5. Which level of regional economic integration eliminates internal trade barriers and adopts
a common external trade policy, but does not allow free movement of factors of production?
A. Customs Union
B. Free Trade Area
C. Common Market
D. Economic Union
Answer: A
Conceptual Explanation: A Customs Union adds a common external trade policy to a Free
Trade Area but lacks the free movement of labor and capital found in a Common Market.
6. A firm facing high pressures for local responsiveness and high pressures for cost reductions
should adopt which strategy?
A. Global Standardization Strategy
B. Transnational Strategy
C. Localization Strategy
COMPREHENSIVE EXAM PREP
QUESTIONS AND ANSWERS | 100%
VERIFIED– PASS GUARANTEED – A+
GRADED 2026/2027
1. According to the Heckscher-Ohlin theory, which factor primarily determines the goods a
country will export?
A. The level of government subsidies provided to infant industries
B. The first-mover advantages gained by domestic firms
C. The absolute technological superiority in a specific product category
D. The relative abundance of factors of production like land, labor, and capital
Answer: D
Conceptual Explanation: Heckscher-Ohlin theory posits that countries will export goods
that make intensive use of factors that are locally abundant.
2. Which component of the OLI framework explains why a firm would prefer FDI over
licensing to protect its proprietary technology?
A. Internalization advantages
B. Location advantages
,C. Ownership advantages
D. Operational advantages
Answer: A
Conceptual Explanation: Internalization theory (the ‘I’ in OLI) suggests firms use FDI to
maintain control over specialized knowledge and avoid the risks of licensing.
3. A company produces a high-end medical device in the US and sells it globally. As the
product matures and competitors emerge, production moves to lower-cost locations. This
follows which theory?
A. International Product Life Cycle
B. New Trade Theory
C. Comparative Advantage
D. Mercantilism
Answer: A
Conceptual Explanation: Raymond Vernon’s theory suggests that as products mature,
both the location of sales and the optimal production location will change.
4. If the spot exchange rate for the Euro is $1.10 and the 90-day forward rate is $1.15, the
Euro is said to be trading at a:
A. Forward premium
B. Forward discount
, C. Liquidity trap
D. Floating peg
Answer: A
Conceptual Explanation: A forward premium occurs when the forward rate is higher than
the spot rate, indicating the market expects the currency to appreciate.
5. Which level of regional economic integration eliminates internal trade barriers and adopts
a common external trade policy, but does not allow free movement of factors of production?
A. Customs Union
B. Free Trade Area
C. Common Market
D. Economic Union
Answer: A
Conceptual Explanation: A Customs Union adds a common external trade policy to a Free
Trade Area but lacks the free movement of labor and capital found in a Common Market.
6. A firm facing high pressures for local responsiveness and high pressures for cost reductions
should adopt which strategy?
A. Global Standardization Strategy
B. Transnational Strategy
C. Localization Strategy
