C211 Global Economics Final Exam Latest
Update Comprehensive Questions with
Approved Answers Graded A+
Ability-to-pay principle - Answer -the idea that taxes should be levied on a person according to
how well that person can shoulder the burden
absolute advantage - Answer -The economic advantage one nation enjoys that is absolutely
superior to other nations.
absorptive capacity - Answer -The ability to recognize the value of new information, assimilate it,
and apply it.
accommodative strategy - Answer -A strategy characterized by some support from top managers,
who may increasingly view CSR as a worthwhile endeavor.
accounting profit - Answer -total revenue minus total explicit cost
acquisition - Answer -A transfer of the control of operations and management from one firm
(target) to another (acquirer), the former becoming a unit of the latter.
acquisition premium - Answer -The difference between the acquisition price and the market value
of target firms.
adaptability - Answer -The ability to change supply chain configurations in response to longer-term
changes in the environment and technology.
Administrative policies - Answer -Bureaucratic rules that make it harder to import foreign goods.
Adverse selection - Answer -the tendency for the mix of unobserved attributes to become
undesirable from the standpoint of an uninformed party
agency costs - Answer -The costs associated with principal-agent relationships.
agency relationship - Answer -The relationship between principals (such as shareholders) and
agents (such as professional managers).
Agency theory - Answer -A theory that focuses on principal-agent relationships (or in short, agency
relationships).
Agent - Answer -A person (such as manager) to whom authority is delegated.
agglomeration - Answer -Clustering of economic activities in certain locations.
aggregate-supply curve - Answer -a curve that shows the quantity of goods and services that firms
choose to produce and sell at each price level
,Agility - Answer -The ability to react quickly to unexpected shifts in supply and demand.
Alignment - Answer -Alignment of interests of various players.
Andean Community - Answer -A customs union in South America that was launched in 1969.
antidumping duties - Answer -Tariffs levied on imports that have been "dumped" (selling below
costs to "unfairly" drive domestic firms out of business).
Antidumping law - Answer -Law that makes it illegal for an exporter to sell goods below cost
abroad with the intent to raise prices after eliminating local rivals.
antitrust law - Answer -Law that outlaws cartels (trusts).
antitrust policy - Answer -Government policy designed to combat monopolies and cartels.
APEC - Answer -The official title for regional economic integration involving 21 member economies
around the Pacific.
appreciation - Answer -an increase in the value of a currency as measured by the amount of
foreign currency it can buy
Arrow's impossibility theorem - Answer -a mathematical result showing that, under certain
assumed conditions, there is no scheme for aggregating individual preferences into a valid set of social
preferences
Asia-Pacific Economic Cooperation (APEC) - Answer -The official title for regional economic
integration involving 21 member economies around the Pacific.
Association of Southeast Asian Nations (ASEAN) - Answer -The organization underpinning regional
economic integration in Southeast Asia.
attack - Answer -An initial set of actions to gain competitive advantage.
Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA/CER) - Answer -A
free trade agreement between Australia and New Zealand that was launched in 1983.
Automatic stabilizers - Answer -changes in fiscal policy that stimulate aggregate demand when the
economy goes into a recession without policymakers having to take any deliberate action
Average fixed cost - Answer -fixed cost divided by the quantity of output
average revenue - Answer -total revenue divided by the quantity sold
average tax rate - Answer -total taxes paid divided by total income
average total cost - Answer -total cost divided by the quantity of output
average variable cost - Answer -variable cost divided by the quantity of output
,balance of payments - Answer -A country's international transaction statement, which includes
merchandise trade, service trade, and capital movement.
balance of trade - Answer -The aggregation of importing and exporting that leads to the country-
level trade surplus or deficit.
balance sheet approach - Answer -A compensation approach that balances the cost of living
differences relative to parent country levels and adds a financial inducement to make the package
attractive.
balanced trade - Answer -a situation in which exports equal imports
bandwagon effect - Answer -The effect of investors moving in the same direction at the same time,
like a herd.
bank capital - Answer -the resources a bank's owners have put into the institution
bargaining power - Answer -Ability to extract favorable outcome from negotiations due to one
party's strengths.
base of the pyramid (BOP) - Answer -Economies where people make less than $2,000 per capita
per year.
behavioral economics - Answer -the subfield of economics that integrates the insights of
psychology
Beijing Consensus - Answer -A view that questions Washington Consensus' belief in the superiority
of private ownership over state ownership in economic policy making, which is often associated with the
position held by the Chinese government.
Benchmarking - Answer -Examining whether a firm has resources and capabilities to perform a
particular activity in a manner superior to competitors.
benefits principle - Answer -the idea that people should pay taxes based on the benefits they
receive from government services
bid rate - Answer -The price to buy a currency.
blue ocean strategy - Answer -Strategy that focuses on developing new markets ("blue ocean")
and avoids attacking core markets defended by rivals, which is likely to result in a bloody price war or a
"red ocean."
Bond - Answer -Loan issued by the firm and held by creditors.
Bondholders - Answer -Buyer of bonds.
Born global firm (international new venture) - Answer -A start-up company that attempts to do
business abroad from inception.
, born global firms - Answer -A start-up company that attempts to do business abroad from
inception.
bounded rationality - Answer -The necessity of making rational decisions in the absence of
complete information.
Bretton Woods system - Answer -A system in which all currencies were pegged at a fixed rate to
the US dollar.
BRIC - Answer -Brazil, Russia, India, and China.
budget constraint - Answer -the limit on the consumption bundles that a consumer can afford
budget deficit - Answer -an excess of government spending over government receipts
budget surplus - Answer -an excess of government receipts over government spending
build-operate-transfer (BOT) agreement - Answer -A non-equity mode of entry used to build a
longer-term presence by building and then operating a facility for a period of time before transferring
operations to a domestic agency or firm.
business cycle - Answer -fluctuations in economic activity, such as employment and production
business process outsourcing (BPO) - Answer -Outsourcing business processes to third-party
providers.
Capabilities - Answer -The tangible and intangible assets a firm uses to choose and implement its
strategies.
capacity to punish - Answer -Sufficient resources possessed by a price leader to deter and combat
defection.
Capital - Answer -the equipment and structures used to produce goods and services
capital flight - Answer -a large and sudden reduction in the demand for assets located in a country
capital requirement - Answer -a government regulation specifying a minimum amount of bank
capital
Captive sourcing - Answer -Setting up subsidiaries abroad so that the work done is in-house but
the location is foreign. Also known as foreign direct investment (FDI).
Cartel (trust) - Answer -An output- and price-fixing entity involving multiple competitors.
catch-up effect - Answer -the property whereby countries that start off poor tend to grow more
rapidly than countries that start off rich
causal ambiguity - Answer -The difficulty of identifying the actual cause of a firm's successful
performance.
Update Comprehensive Questions with
Approved Answers Graded A+
Ability-to-pay principle - Answer -the idea that taxes should be levied on a person according to
how well that person can shoulder the burden
absolute advantage - Answer -The economic advantage one nation enjoys that is absolutely
superior to other nations.
absorptive capacity - Answer -The ability to recognize the value of new information, assimilate it,
and apply it.
accommodative strategy - Answer -A strategy characterized by some support from top managers,
who may increasingly view CSR as a worthwhile endeavor.
accounting profit - Answer -total revenue minus total explicit cost
acquisition - Answer -A transfer of the control of operations and management from one firm
(target) to another (acquirer), the former becoming a unit of the latter.
acquisition premium - Answer -The difference between the acquisition price and the market value
of target firms.
adaptability - Answer -The ability to change supply chain configurations in response to longer-term
changes in the environment and technology.
Administrative policies - Answer -Bureaucratic rules that make it harder to import foreign goods.
Adverse selection - Answer -the tendency for the mix of unobserved attributes to become
undesirable from the standpoint of an uninformed party
agency costs - Answer -The costs associated with principal-agent relationships.
agency relationship - Answer -The relationship between principals (such as shareholders) and
agents (such as professional managers).
Agency theory - Answer -A theory that focuses on principal-agent relationships (or in short, agency
relationships).
Agent - Answer -A person (such as manager) to whom authority is delegated.
agglomeration - Answer -Clustering of economic activities in certain locations.
aggregate-supply curve - Answer -a curve that shows the quantity of goods and services that firms
choose to produce and sell at each price level
,Agility - Answer -The ability to react quickly to unexpected shifts in supply and demand.
Alignment - Answer -Alignment of interests of various players.
Andean Community - Answer -A customs union in South America that was launched in 1969.
antidumping duties - Answer -Tariffs levied on imports that have been "dumped" (selling below
costs to "unfairly" drive domestic firms out of business).
Antidumping law - Answer -Law that makes it illegal for an exporter to sell goods below cost
abroad with the intent to raise prices after eliminating local rivals.
antitrust law - Answer -Law that outlaws cartels (trusts).
antitrust policy - Answer -Government policy designed to combat monopolies and cartels.
APEC - Answer -The official title for regional economic integration involving 21 member economies
around the Pacific.
appreciation - Answer -an increase in the value of a currency as measured by the amount of
foreign currency it can buy
Arrow's impossibility theorem - Answer -a mathematical result showing that, under certain
assumed conditions, there is no scheme for aggregating individual preferences into a valid set of social
preferences
Asia-Pacific Economic Cooperation (APEC) - Answer -The official title for regional economic
integration involving 21 member economies around the Pacific.
Association of Southeast Asian Nations (ASEAN) - Answer -The organization underpinning regional
economic integration in Southeast Asia.
attack - Answer -An initial set of actions to gain competitive advantage.
Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA/CER) - Answer -A
free trade agreement between Australia and New Zealand that was launched in 1983.
Automatic stabilizers - Answer -changes in fiscal policy that stimulate aggregate demand when the
economy goes into a recession without policymakers having to take any deliberate action
Average fixed cost - Answer -fixed cost divided by the quantity of output
average revenue - Answer -total revenue divided by the quantity sold
average tax rate - Answer -total taxes paid divided by total income
average total cost - Answer -total cost divided by the quantity of output
average variable cost - Answer -variable cost divided by the quantity of output
,balance of payments - Answer -A country's international transaction statement, which includes
merchandise trade, service trade, and capital movement.
balance of trade - Answer -The aggregation of importing and exporting that leads to the country-
level trade surplus or deficit.
balance sheet approach - Answer -A compensation approach that balances the cost of living
differences relative to parent country levels and adds a financial inducement to make the package
attractive.
balanced trade - Answer -a situation in which exports equal imports
bandwagon effect - Answer -The effect of investors moving in the same direction at the same time,
like a herd.
bank capital - Answer -the resources a bank's owners have put into the institution
bargaining power - Answer -Ability to extract favorable outcome from negotiations due to one
party's strengths.
base of the pyramid (BOP) - Answer -Economies where people make less than $2,000 per capita
per year.
behavioral economics - Answer -the subfield of economics that integrates the insights of
psychology
Beijing Consensus - Answer -A view that questions Washington Consensus' belief in the superiority
of private ownership over state ownership in economic policy making, which is often associated with the
position held by the Chinese government.
Benchmarking - Answer -Examining whether a firm has resources and capabilities to perform a
particular activity in a manner superior to competitors.
benefits principle - Answer -the idea that people should pay taxes based on the benefits they
receive from government services
bid rate - Answer -The price to buy a currency.
blue ocean strategy - Answer -Strategy that focuses on developing new markets ("blue ocean")
and avoids attacking core markets defended by rivals, which is likely to result in a bloody price war or a
"red ocean."
Bond - Answer -Loan issued by the firm and held by creditors.
Bondholders - Answer -Buyer of bonds.
Born global firm (international new venture) - Answer -A start-up company that attempts to do
business abroad from inception.
, born global firms - Answer -A start-up company that attempts to do business abroad from
inception.
bounded rationality - Answer -The necessity of making rational decisions in the absence of
complete information.
Bretton Woods system - Answer -A system in which all currencies were pegged at a fixed rate to
the US dollar.
BRIC - Answer -Brazil, Russia, India, and China.
budget constraint - Answer -the limit on the consumption bundles that a consumer can afford
budget deficit - Answer -an excess of government spending over government receipts
budget surplus - Answer -an excess of government receipts over government spending
build-operate-transfer (BOT) agreement - Answer -A non-equity mode of entry used to build a
longer-term presence by building and then operating a facility for a period of time before transferring
operations to a domestic agency or firm.
business cycle - Answer -fluctuations in economic activity, such as employment and production
business process outsourcing (BPO) - Answer -Outsourcing business processes to third-party
providers.
Capabilities - Answer -The tangible and intangible assets a firm uses to choose and implement its
strategies.
capacity to punish - Answer -Sufficient resources possessed by a price leader to deter and combat
defection.
Capital - Answer -the equipment and structures used to produce goods and services
capital flight - Answer -a large and sudden reduction in the demand for assets located in a country
capital requirement - Answer -a government regulation specifying a minimum amount of bank
capital
Captive sourcing - Answer -Setting up subsidiaries abroad so that the work done is in-house but
the location is foreign. Also known as foreign direct investment (FDI).
Cartel (trust) - Answer -An output- and price-fixing entity involving multiple competitors.
catch-up effect - Answer -the property whereby countries that start off poor tend to grow more
rapidly than countries that start off rich
causal ambiguity - Answer -The difficulty of identifying the actual cause of a firm's successful
performance.
