WGU C211 OA Global Economics Exam (2023) (Verified Answers)

Which political view of foreign direct investment (FDI) is most widely used by governments in the current international business environment? - Correct answerProtectionism Which factors predict the degree of rivalry between a pair of competitors? 2 choices - Correct answer-Market commonality and Cost structure Which factors predicts how local firms in emerging economics will respond to multinational competitors? Competitive assets and industry pressures to globalize - Correct answer-Market dominance and market fragmentation During which stage of the product life cycle do sales and profits gradually increase before seeing more dramatic increases? - Correct answer-Growth Which factor determines the foreign exchange rate any currency? - Correct answerSupply and demand for the currency Which risk must a corporation minimize if it is to effectively manage short-term currency fluctuations? - Correct answer-Transaction risk Which policy does a country use to determine the exchange rate of their currency in relationship to another country's currency if they do not rely on market forces? - Correct answer-Fixed rate policy Which term refers to trading currencies and currency derivatives in order to earn profits and help make prices efficient? - Correct answer-Speculation Which type of advantage is gained by a company based on where it operates - Correct answer-Location-specific Who gains from erecting significant entry barriers for other entrants? - Correct answerFirst movers Which strategy for entering into a foreign market has the lowest degree of risk? Whollyowned subsidiary - Correct answer-Wholly-owned subsidiary What is a non-equity mode involving some type of contractual agreement? - Correct answer-Direct exporting After the Lehman Brothers collapse, the federal Reserve stood ready to lend financial institutions funds. When the Federal reserve did this, it was acting in its role as a lender of last resort. Which type of group has this role? - Correct answer-Nongovernmental organization What is the comprehensive free-trade settlement among Canada, US, and Mexico, that addresses issues of protecting workers rights, the environment and reducing tariffs and non-tariff trade barriers? - Correct answer-NAFTA What is one of the core propositions underpinning an institution-based view of global business? A political system should establish controls of the financial sector - Correct answer-If formal constraints are not in place, the informal constraints will guide decision making What is one of the core propositions underpinning an institution-based view of global business? - Correct answer-Managers and corporations make rational decisions within their formal and informal framework T Which type of system allows businesses to be privately owned with a strong individualistic profit orientation? - Correct answer-Market economy Which legal system is based on a religious document and religious teachings? - Correct answer-Theocratic law Which type of good has well-established property rights? - Correct answer-Private goods Which activity disregards basic property rights? - Correct answer-Students play loud music in the open area between dorms What is one type of economy that uses the market system? - Correct answer-Mixed economy Which kind of outcome was Adam Smith referring to when describing the invisible hand? - Correct answer-Market outcomes What does the value of the marginal product of labor for a perfectly competitive, profitmaximizing firm equal? - Correct answer-Rate What is the change in total cost equal to? - Correct answer-Marginal cost multiplied by change in quantity Which condition must be satisfied for a competitive firm to shut down in a short run - Correct answer-Total variable costs are greater than total revenue What is a characteristic of a monopoly's demand curve? - Correct answer-It is the same as the market demand curve Which statement describes a monopoly demand curve? - Correct answer-It is perfectly inelastic What is the profit maximization condition for a monopoly? - Correct answer-Where marginal revenue equals marginal cos What is a characteristic of monopolistic competition? - Correct answer-Many firms sell differentiated products How does self-interest influence each prisoner's decision in the prisoner's dilemma? - Correct answer-Neither prisoner will likely confess Why is studying the prisoner's dilemma applicable to business? - Correct answer-It demonstrates the value of mapping out a potential strategy given actions of rivals What does an indifference curve illustrate? - Correct answer-The preferences of a consumer What happens to an individual's budget constraint if the budget decreases and prices remain the same? - Correct answer-The budget constraints line shifts parallel inward What happens to the nominal interest rate and the quantity of money if the Federal Reserve increases the reserve requirement? Choose 2 answers - Correct answer-The interest rate increases & The quantity of money decreases What will happen to the equilibrium in the market for a good if demand and supply increase simultaneously? - Correct answer-Equilibrium quantity will always increase What concept measures how much the quantity supplied responds to change in price? - Correct answer-Price elasticity of supply Which elasticity of demand measures how the quality demanded of one good responds to a change in price of another good? - Correct answer-Cross-price elasticity of demand What is the interest rate on a loan borrowed by banks from the federal reserves? - Correct answer-Bank rate Which target rate would the federal reserve lower in order to stimulate the economy and avoid a recession - Correct answer-The federal funds rate Which action would the federal reserve rate take to expand the money supply and lower the equilibrium interest rate? - Correct answer-Purchase government bonds on the open market What happens when the price of a good increases holding everything else constant? - Correct answer-Consumer surplus decreases Which activity will result in an increase in gross domestic product (GDP) other things being equal? - Correct answer-A law passes making the sale of recreational marijuana lega 8. Which two types of investment are included in gross domestic product (GDP) 2 answers - Correct answer-Spending on new residential construction & Spending to build new factories A nation begins applying a tariff on bananas which is imported product - Correct answer-Price will increase A nation has implemented a tariff on rare minerals. How will this affect the price domestic consumers pay? - Correct answer-It will cause the price consumers pay to go up Which factor influences price elasticity demand? - Correct answer-availability of close substitutes What concept measures how many quantity supplied responds to change in price? - Correct answer-price elasticity of supply Which type of market operation does the federal reserve use to increase the money supply when it buys bonds from the public in the nation's bond market? - Correct answer-Open Market operations If the government increases its purchases by $10 billion the aggregate demand for goods and services could rise by more than $10 billion what does this illustrate? - Correct answer-multiplier effect Which fiscal policy will result in rightward shift of the aggregate demand curve? - Correct answer-expanding government purchases Which two statements describe gross domestic product (GDP). Choose 2 - Correct answer-GDP is the most used measure of a country economic well being & GDP measures the market value of all final goods and services A man is willing to pay $300 for a pair of boots and purchases it for $200 what does this indicate? - Correct answer-the consumer surplus will be $100 Which strategy for entering a foreign market has the highest degree of risk? - Correct answer-licensing Which code of entry provides advantages to a multinational firm that can be transferred within the firm at very low cost? - Correct answer-externalization What advantages do corporations receive when operating in favorable areas within a given country? - Correct answer-labor specific Which body guides economic activity in a command economy? - Correct answer-the government Which price will a monopoly set? - Correct answer-above marginal cost Which condition determines the profit maximizing output for a monopolist? - Correct answer-marginal revenue equals marginal cost How does oligopoly represent a prisoner's dilemma? - Correct answer-it depends the difficulty in maintaining cooperation's agreement What is used to measure the opportunity cost on one good when it is being compared to another good? - Correct answer-the scope of the budget constraint What will an increase in income cause to a consumer's budget constraints? - Correct answer-a shift outward, parallel to its initial position What happens to market equilibrium quantity and price if supply increases and demand remains the same? (Pick 2) - Correct answer-Quantity Increases & Price decreases Which two phrases represent the views of globalization? Choose two answers. - Correct answer-a pendulum that swings from one extreme to another & a competition among key financial centers and markets What are two trade barriers? Choose two answers. - Correct answer-Tariffs & Nontariffs What is the effect of tariff on a particular product for the country imposing the tariff? - Correct answer-Increases domestic production of the product Which benefits come to the host country as a result of foreign direct investment? Choose two answers. - Correct answer-Creation of domestic jobs & Domestic resource allocation Which characteristic of firm resources affects competitive dynamics? - Correct answerImitability Which characteristic of firm resources affects competitive dynamics, according to the VRIO framework? - Correct answer-Rarity