WGU C211 – Global Economics for Managers
(2025/2026 Latest Exam Prep) | Complete
Study Guide & Verified Practice Q&A PDF
Views on Globalization - correct answerNew, Evolutionary, and Pendulum
"New" view on globalization - correct answerA force sweeping through the world in
recent times.
"Evolutionary" view on globalization - correct answerA long-run historical evolution since
the dawn of human history
"Pendulum" view on globalization - correct answerOne that swings from one extreme to
another from time to time
Foreign Direct Investment - correct answerDirect investment in, control, and
management of value-added activities in other countries
Political views on FDI - correct answerRadical View, Free Market View, Pragmatic
Nationalism
Benefits to a country receiving FDI - correct answerCapital Inflow, Technology Spillover,
Advanced Management Know-How, Job creation
Costs to a country receiving FDI - correct answerLoss of Sovereignty, Adverse effects
on competition,
Capital outflow.
How do resources and capabilities influence the competitive dynamics of a business? -
correct answerResource similarity and market commonality can yield a powerful
framework for competitor analysis.
Resource similarity - correct answerThe extent to which a given competitor possesses
strategic endowment comparable, in terms of both type and amount, to those of the
focal firm.
How does resource similarity impact competitive dynamics? - correct answerFirms with
a high degree are likely to have similar competitive actions. (Starbuck's instant coffee &
McDonald's iced coffee)
,Classical theories of international trade - correct answerMercantilism, Absolute
advantage, and Comparative advantage
Modern theory view - correct answerDynamic
Classical theory view - correct answerStatic
Absolute advantage - correct answerThe economic advantage one nation enjoys that is
superior to other nations
Comparative advantage - correct answerThe advantage one economic activity nation
enjoys in comparison with other nations (relative, not absolute)
Mercantilism - correct answerA theory that suggests that the wealth of the world is fixed
and that a nation that exports more and imports less will be richer.
Features of the product life cycle? - correct answerNew, Maturing, and Standardized
Strategic trade - correct answerIntervention by governments in certain industries can
enhance their odds for international success.
How are supply and demand related to the exchange rate of a country? - correct
answerThe price of a commodity, a country's currency, is fundamentally determined by
this. Strong demand leads to price hikes; oversupply results in price drops.
Which theory came first? - correct answerMercantilism (although both are of the idea
that governments should actively protect domestic industries from imports and
vigorously promote exports)
If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - correct answerForward transactions, an act
know as currency hedging.
Transaction risk - correct answerThe exchange rate risk associated with the time delay
between entering into a contract and settling it.
Hedging - correct answerA transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the spot rate.
Currency hedging - correct answerA way to protect traders and investors from being
exposed to the fluctuations of the spot rate
Strategic hedging - correct answerA means of spreading out activities in different
currency zones in order to offset the currency losses in certain regions through gains in
other regions (currency diversification)
,First mover advantages - correct answerProprietary, technological leadership, pre-
emption of scarce resources, establishment of entry barriers to late entrants, avoidance
of clash with dominant firms at home, relationships with key stakeholders, (such as
governments.)
Late mover advantages - correct answerOpportunity to free ride on first-mover
investments, Resolution of technological and market uncertainty, First mover's difficulty
to adapt to market changes.)
Foreign market entries types - correct answerNon-equity and equity
Non-equity - correct answerReflects relatively smaller commitments to overseas
markets. Determines firms MNE status.
Equity - correct answerindicative of relatively larger, harder-to-reverse commitments.
Determines firms MNE status.
How do institutions reduce uncertainty? - correct answerEstablish "rules of the game"
that economic players play by. A standard to follow in order to survive and prosper. By
signaling which conduct is legitimate and which is not, institutions constrain the range of
acceptable actions.
Regulatory pillar - correct answerThe coercive power of governments (laws, regs, rules)
Normative pillar - correct answerValues, beliefs, and actions of other relevant players
(norms, cultures, ethics)
Cognitive pillar - correct answerThe internalized, taken-for-granted values and beliefs
that guide behavior. (beliefs between right/wrong)
Formal institution - correct answerOne that include laws, regulations and rules
Informal institution - correct answerOne that includes norms, cultures and ethics
What core propositions lie at the root of the institution based view on global business? -
correct answer(1) managers and firms rationally pursue their interests and make
choices within institutional constraints (bounded rationality)
(2) in situations where formal constraints are unclear or fail, informal constraints play a
larger role in reducing uncertainty and providing constancy to managers and firms
(personal relationships and connections)
The institution based view global business is grounded upon - correct answerThe
dynamic interaction between institutions and firms, and considers firm behaviors as the
outcome of such an interaction.
, How is global business affected by democracy? - correct answerAn individual's right to
freedom of expression and organization. For example, starting up a firm is an act of
economic expression
How is global business affected by totalitarianism? - correct answerThese countries
often experience wars, riots, protests, chaos, and breakdowns, which result in higher
political risk.
Democracy - correct answerCitizens elect representatives to govern the country on their
behalf.
Totalitarianism - correct answerOne person or party exercises absolute political control
over the population.
Civil law - correct answerLaw that uses comprehensive statutes and codes as a primary
means to form legal judgments.
Common law - correct answerLaw shaped by precedents and traditions from previous
judicial decisions.
Theocratic law - correct answerA legal system based on religious teachings.
How do civil, common and theocratic laws compare? - correct answerRelative to civil
law, common law has more flexibility because judges have to resolve specific disputes
based on their interpretation of the law. Civil law has less flexibility because judges only
have the power to apply the law.
Property right - correct answerThe legal rights to use an economic resource and to
derive income and benefits from it. Can be used as collateral for starting a firm; not as
common in developing countries, therefore hindering economic growth.
Intellectual property right - correct answerRights associated with the ownership. They
primarily include rights associated with patents, copyrights, and trademarks.
Market economy - correct answerOne that is characterized by the "invisible hand" of
market forces-all factors of production should be privately owned.
Command economy - correct answerOne that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply, demand,
and pricing are planned by the government.
Mixed economy - correct answerOne has elements of both a market economy and a
command economy. It boils down to the relative distribution of market forces versus
command forces.
(2025/2026 Latest Exam Prep) | Complete
Study Guide & Verified Practice Q&A PDF
Views on Globalization - correct answerNew, Evolutionary, and Pendulum
"New" view on globalization - correct answerA force sweeping through the world in
recent times.
"Evolutionary" view on globalization - correct answerA long-run historical evolution since
the dawn of human history
"Pendulum" view on globalization - correct answerOne that swings from one extreme to
another from time to time
Foreign Direct Investment - correct answerDirect investment in, control, and
management of value-added activities in other countries
Political views on FDI - correct answerRadical View, Free Market View, Pragmatic
Nationalism
Benefits to a country receiving FDI - correct answerCapital Inflow, Technology Spillover,
Advanced Management Know-How, Job creation
Costs to a country receiving FDI - correct answerLoss of Sovereignty, Adverse effects
on competition,
Capital outflow.
How do resources and capabilities influence the competitive dynamics of a business? -
correct answerResource similarity and market commonality can yield a powerful
framework for competitor analysis.
Resource similarity - correct answerThe extent to which a given competitor possesses
strategic endowment comparable, in terms of both type and amount, to those of the
focal firm.
How does resource similarity impact competitive dynamics? - correct answerFirms with
a high degree are likely to have similar competitive actions. (Starbuck's instant coffee &
McDonald's iced coffee)
,Classical theories of international trade - correct answerMercantilism, Absolute
advantage, and Comparative advantage
Modern theory view - correct answerDynamic
Classical theory view - correct answerStatic
Absolute advantage - correct answerThe economic advantage one nation enjoys that is
superior to other nations
Comparative advantage - correct answerThe advantage one economic activity nation
enjoys in comparison with other nations (relative, not absolute)
Mercantilism - correct answerA theory that suggests that the wealth of the world is fixed
and that a nation that exports more and imports less will be richer.
Features of the product life cycle? - correct answerNew, Maturing, and Standardized
Strategic trade - correct answerIntervention by governments in certain industries can
enhance their odds for international success.
How are supply and demand related to the exchange rate of a country? - correct
answerThe price of a commodity, a country's currency, is fundamentally determined by
this. Strong demand leads to price hikes; oversupply results in price drops.
Which theory came first? - correct answerMercantilism (although both are of the idea
that governments should actively protect domestic industries from imports and
vigorously promote exports)
If a company seeks to limit foreign exchange rate exposure in the forward direction,
what is the most effective way to do this? - correct answerForward transactions, an act
know as currency hedging.
Transaction risk - correct answerThe exchange rate risk associated with the time delay
between entering into a contract and settling it.
Hedging - correct answerA transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the spot rate.
Currency hedging - correct answerA way to protect traders and investors from being
exposed to the fluctuations of the spot rate
Strategic hedging - correct answerA means of spreading out activities in different
currency zones in order to offset the currency losses in certain regions through gains in
other regions (currency diversification)
,First mover advantages - correct answerProprietary, technological leadership, pre-
emption of scarce resources, establishment of entry barriers to late entrants, avoidance
of clash with dominant firms at home, relationships with key stakeholders, (such as
governments.)
Late mover advantages - correct answerOpportunity to free ride on first-mover
investments, Resolution of technological and market uncertainty, First mover's difficulty
to adapt to market changes.)
Foreign market entries types - correct answerNon-equity and equity
Non-equity - correct answerReflects relatively smaller commitments to overseas
markets. Determines firms MNE status.
Equity - correct answerindicative of relatively larger, harder-to-reverse commitments.
Determines firms MNE status.
How do institutions reduce uncertainty? - correct answerEstablish "rules of the game"
that economic players play by. A standard to follow in order to survive and prosper. By
signaling which conduct is legitimate and which is not, institutions constrain the range of
acceptable actions.
Regulatory pillar - correct answerThe coercive power of governments (laws, regs, rules)
Normative pillar - correct answerValues, beliefs, and actions of other relevant players
(norms, cultures, ethics)
Cognitive pillar - correct answerThe internalized, taken-for-granted values and beliefs
that guide behavior. (beliefs between right/wrong)
Formal institution - correct answerOne that include laws, regulations and rules
Informal institution - correct answerOne that includes norms, cultures and ethics
What core propositions lie at the root of the institution based view on global business? -
correct answer(1) managers and firms rationally pursue their interests and make
choices within institutional constraints (bounded rationality)
(2) in situations where formal constraints are unclear or fail, informal constraints play a
larger role in reducing uncertainty and providing constancy to managers and firms
(personal relationships and connections)
The institution based view global business is grounded upon - correct answerThe
dynamic interaction between institutions and firms, and considers firm behaviors as the
outcome of such an interaction.
, How is global business affected by democracy? - correct answerAn individual's right to
freedom of expression and organization. For example, starting up a firm is an act of
economic expression
How is global business affected by totalitarianism? - correct answerThese countries
often experience wars, riots, protests, chaos, and breakdowns, which result in higher
political risk.
Democracy - correct answerCitizens elect representatives to govern the country on their
behalf.
Totalitarianism - correct answerOne person or party exercises absolute political control
over the population.
Civil law - correct answerLaw that uses comprehensive statutes and codes as a primary
means to form legal judgments.
Common law - correct answerLaw shaped by precedents and traditions from previous
judicial decisions.
Theocratic law - correct answerA legal system based on religious teachings.
How do civil, common and theocratic laws compare? - correct answerRelative to civil
law, common law has more flexibility because judges have to resolve specific disputes
based on their interpretation of the law. Civil law has less flexibility because judges only
have the power to apply the law.
Property right - correct answerThe legal rights to use an economic resource and to
derive income and benefits from it. Can be used as collateral for starting a firm; not as
common in developing countries, therefore hindering economic growth.
Intellectual property right - correct answerRights associated with the ownership. They
primarily include rights associated with patents, copyrights, and trademarks.
Market economy - correct answerOne that is characterized by the "invisible hand" of
market forces-all factors of production should be privately owned.
Command economy - correct answerOne that is defined by a government taking all
factors of production to be government-owned or state-owned, and all supply, demand,
and pricing are planned by the government.
Mixed economy - correct answerOne has elements of both a market economy and a
command economy. It boils down to the relative distribution of market forces versus
command forces.
