WGU C211 GLOBAL ECONOMICS FOR
MANAGERS EXAM QUESTIONS AND
ANSWERS. VERIFIED 2025/2026.
Explain the New, Evolutionary, and Pendulum views of Globalization. How do these differ from
one another? - ANS New globalization is a new force sweeping through the world in recent
times. Pendulum globalization is a pendulum that swings from one extreme to the the other
from time to time. Evolutionary globalization is a long historical evolution since the dawn of
human history.
What is Foreign Direct Investment? - ANS Investment in controlling and managing value-
added activities in other countries.
What different political views exist on FDI? - ANS Radical - hostile to FDI, roots to Marxism,
treates FDI as an instrument of imperialism and as a vehicle for exploitation of domestic
resources by foreign capitalists and firms.
Free Market - suggests that FDI unrestricted by government intervention will enable countries
to tap into their absolute comparative advantages by specializing in the production of certain
goods and services.. win-win logic FDI friendly polices Brazil, China, Hungary, India, Ireland,
Russia.
Pragmatic Nationalism - Practiced by most countries. Viewing FDI as having both pros and cons
and only aprroving FDI when its benefits outweigh costs.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,What benefits exist to a country receiving FDI? - ANS Capital inflow - can help improve a host
country's balance of payments
Technology - can create technology spillovers that benefit domestic firms and industries
Advanced managment - know-how may be highly valued.
FDI creates jobs both directly and indirectly. Direct benefits arise when MNEs employ
individuals locally. Indirect benefits include jobs created when local suppliers increase hiring and
when MNE employees spend money locally resulting in more jobs. Repatriated earnings from
profits from FDI. Increased exports of components and services to host countries. Learning via
FDI from operations abroad.
What costs exist to a country receiving FDI? - ANS -Loss of sovereignty because of decisions
to invest, produce and market products and/or to close plants and lay off workers in a host
country are being made by foreigners.
-Adverse effects on competiton. May drive some domestic firms out of business. Having driven
domestic firms out of business MNE's in theory may be able to monopolize local markets.
-Capital outflow when MNE's make profits in host countries and repatriate (send back) such
earnings to headquarters in home countries, host countries experience a net outflow in the
capital account in their balance of payments.
How do resources and capabilities influence the competitive dynamics of a business? -
ANS Strong resources and capabilities help to compete and/or cooperate more effectively.
What is resource similarity and how does this impact competitive dynamics? - ANS Extent to
which a given competitor possesses strategic endownment comparable, in terms of both type
and amount, to those of the focal firm.
Give a description of the classical theory of international trade. - ANS Mercantilism, absolute
advantage, comparative advantage
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, How would the modern theory compare to the classical theory? - ANS Modern Trade
Theories are the major theories of international trade that were advanced in the 20th century,
which consist of (1) product life cycle, (2) strategic trade, and (3) national competitive advantage
of industries instead of relying on simple factor analysis, modern theories rely on more realistic
product life cycles, first-mover advantages, and the "diamond" to explain and predict patterns of
trade.
Compare absolute advantage to comparative advantage. What differences exist? -
ANS Absolute advantage is the ability of an individual, firm or country to produce more of a
good or service than competitors when using the same amount of resources. (WinWin)
Comparative advantage is the ability of an individual, firm or country to produce a good or
service at a lower opportunity cost than other producers. (Opportunity cost)
What is mercantilism and why is this an important term? - ANS An economic theory that
advocates government regulation of international trade. It is an important tool in creating more
wealth for by reducing the trade deficit. (Zero-sum WinLose)
What are the critical features of the product life cycle? - ANS New, maturing and
standartdized
First theory to incorporate dynamic changes in patterns of trade. More realistic with trade in
industrial products in the 20th century.
How would you describe strategic trade? - ANS A theory that suggests that stategic
intervention 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? - ANS The supply of a
currency is determined by the domestic demand for imports from abroad.
Which theory came first, mecantilism or modern-day protectionism? - ANS Mercantilism
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
MANAGERS EXAM QUESTIONS AND
ANSWERS. VERIFIED 2025/2026.
Explain the New, Evolutionary, and Pendulum views of Globalization. How do these differ from
one another? - ANS New globalization is a new force sweeping through the world in recent
times. Pendulum globalization is a pendulum that swings from one extreme to the the other
from time to time. Evolutionary globalization is a long historical evolution since the dawn of
human history.
What is Foreign Direct Investment? - ANS Investment in controlling and managing value-
added activities in other countries.
What different political views exist on FDI? - ANS Radical - hostile to FDI, roots to Marxism,
treates FDI as an instrument of imperialism and as a vehicle for exploitation of domestic
resources by foreign capitalists and firms.
Free Market - suggests that FDI unrestricted by government intervention will enable countries
to tap into their absolute comparative advantages by specializing in the production of certain
goods and services.. win-win logic FDI friendly polices Brazil, China, Hungary, India, Ireland,
Russia.
Pragmatic Nationalism - Practiced by most countries. Viewing FDI as having both pros and cons
and only aprroving FDI when its benefits outweigh costs.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,What benefits exist to a country receiving FDI? - ANS Capital inflow - can help improve a host
country's balance of payments
Technology - can create technology spillovers that benefit domestic firms and industries
Advanced managment - know-how may be highly valued.
FDI creates jobs both directly and indirectly. Direct benefits arise when MNEs employ
individuals locally. Indirect benefits include jobs created when local suppliers increase hiring and
when MNE employees spend money locally resulting in more jobs. Repatriated earnings from
profits from FDI. Increased exports of components and services to host countries. Learning via
FDI from operations abroad.
What costs exist to a country receiving FDI? - ANS -Loss of sovereignty because of decisions
to invest, produce and market products and/or to close plants and lay off workers in a host
country are being made by foreigners.
-Adverse effects on competiton. May drive some domestic firms out of business. Having driven
domestic firms out of business MNE's in theory may be able to monopolize local markets.
-Capital outflow when MNE's make profits in host countries and repatriate (send back) such
earnings to headquarters in home countries, host countries experience a net outflow in the
capital account in their balance of payments.
How do resources and capabilities influence the competitive dynamics of a business? -
ANS Strong resources and capabilities help to compete and/or cooperate more effectively.
What is resource similarity and how does this impact competitive dynamics? - ANS Extent to
which a given competitor possesses strategic endownment comparable, in terms of both type
and amount, to those of the focal firm.
Give a description of the classical theory of international trade. - ANS Mercantilism, absolute
advantage, comparative advantage
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, How would the modern theory compare to the classical theory? - ANS Modern Trade
Theories are the major theories of international trade that were advanced in the 20th century,
which consist of (1) product life cycle, (2) strategic trade, and (3) national competitive advantage
of industries instead of relying on simple factor analysis, modern theories rely on more realistic
product life cycles, first-mover advantages, and the "diamond" to explain and predict patterns of
trade.
Compare absolute advantage to comparative advantage. What differences exist? -
ANS Absolute advantage is the ability of an individual, firm or country to produce more of a
good or service than competitors when using the same amount of resources. (WinWin)
Comparative advantage is the ability of an individual, firm or country to produce a good or
service at a lower opportunity cost than other producers. (Opportunity cost)
What is mercantilism and why is this an important term? - ANS An economic theory that
advocates government regulation of international trade. It is an important tool in creating more
wealth for by reducing the trade deficit. (Zero-sum WinLose)
What are the critical features of the product life cycle? - ANS New, maturing and
standartdized
First theory to incorporate dynamic changes in patterns of trade. More realistic with trade in
industrial products in the 20th century.
How would you describe strategic trade? - ANS A theory that suggests that stategic
intervention 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? - ANS The supply of a
currency is determined by the domestic demand for imports from abroad.
Which theory came first, mecantilism or modern-day protectionism? - ANS Mercantilism
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
