WGU C211 - Global Economics for Managers
1. Explain the New, Evolutionary, and Pendulum views of
Globalization. How do these differ from one another?
Ans: "New" view on globalization - A force sweeping through the
world in recent times.
"Evolutionary" view on globalization - A long-run historical
evolution since the dawn of human history.
"Pendulum" view on globalization - One that swings from one
extreme to another from time to time
2. **What different political views exist on Foreign Direct
Investment FDI?**
Ans: -Radical View, Free Market View, Pragmatic Nationalism
**answer includes radicalism**
3. What is Foreign Direct Investment?
Ans: Direct investment in, control, and management of value-
added activities in other countries
4. What benefits exist to a country receiving FDI?
Ans: Capital Inflow, Technology Spillover, Advanced Management
Know-How, Job creation
5. What costs exist to a country receiving FDI?
Ans: Loss of Sovereignty, Adverse effects on competition, Capital
outflow.
6. How do resources and capabilities influence the
competitive dynamics of
a business?
,Ans: Resource similarity and market commonality can yield a
powerful
framework for competitor analysis.
7. **What is resource similarity and how does this impact
competitive dynamics?**
Ans: The extent to which a given competitor possesses strategic
endowment
comparable, in terms of both type and amount, to those of the
focal firm.
*Firms with a high degree are likely to have similar competitive
actions. (Starbuck's instant coffee & McDonald's iced coffee)
8. Give a description of the classical theory of
international trade.
Ans: Mercantilism, Absolute advantage, and Comparative
advantage
9. How would the modern theory compare to the classical
theory?
Ans: Modern -Dynamic
Classical - Static
10. Compare absolute advantage to comparative
advantage. What differences exist?
Ans: Absolute advantage - The economic advantage one nation
enjoys that is
superior to other nations
Comparative advantage - The advantage one economic activity
nation enjoys in comparison with other nations (relative, not
absolute)
, 11. What is mercantilism and why is this an important
term?
Ans: A theory that suggests that the wealth of the world is fixed
and that a nation that exports more and imports less will be
richer.
12. **What are the critical features of the product life
cycle?**
Ans: 1. New stage: prod. of a new product (ex. TV) that
commands a price premium will concentrate in the USA, which
exports to other developed nations.
2. Maturing stage: demand & ability to prod.; grow in other dev.
nations (ex. Australia & Italy), it is now worthwhile to produce
there.
3. Standardized stage: the prev. new prod. is standardized (or
commoditized).
Prod. will now move to low-cost dev. nations, which export to dev.
nations. In other words, comparative advantage may change over
time.
13. How would you describe strategic trade?
Ans: Intervention by governments in certain industries can
enhance their odds for international success.
14. **How are supply and demand related to the exchange
rate of a country?**-
Ans: The price of a commodity, a country's currency, is
fundamentally determined by this. Strong demand leads to price
hikes; oversupply results in price drops.
15. Which theory came first, mercantilism or modern-day
protectionism?
1. Explain the New, Evolutionary, and Pendulum views of
Globalization. How do these differ from one another?
Ans: "New" view on globalization - A force sweeping through the
world in recent times.
"Evolutionary" view on globalization - A long-run historical
evolution since the dawn of human history.
"Pendulum" view on globalization - One that swings from one
extreme to another from time to time
2. **What different political views exist on Foreign Direct
Investment FDI?**
Ans: -Radical View, Free Market View, Pragmatic Nationalism
**answer includes radicalism**
3. What is Foreign Direct Investment?
Ans: Direct investment in, control, and management of value-
added activities in other countries
4. What benefits exist to a country receiving FDI?
Ans: Capital Inflow, Technology Spillover, Advanced Management
Know-How, Job creation
5. What costs exist to a country receiving FDI?
Ans: Loss of Sovereignty, Adverse effects on competition, Capital
outflow.
6. How do resources and capabilities influence the
competitive dynamics of
a business?
,Ans: Resource similarity and market commonality can yield a
powerful
framework for competitor analysis.
7. **What is resource similarity and how does this impact
competitive dynamics?**
Ans: The extent to which a given competitor possesses strategic
endowment
comparable, in terms of both type and amount, to those of the
focal firm.
*Firms with a high degree are likely to have similar competitive
actions. (Starbuck's instant coffee & McDonald's iced coffee)
8. Give a description of the classical theory of
international trade.
Ans: Mercantilism, Absolute advantage, and Comparative
advantage
9. How would the modern theory compare to the classical
theory?
Ans: Modern -Dynamic
Classical - Static
10. Compare absolute advantage to comparative
advantage. What differences exist?
Ans: Absolute advantage - The economic advantage one nation
enjoys that is
superior to other nations
Comparative advantage - The advantage one economic activity
nation enjoys in comparison with other nations (relative, not
absolute)
, 11. What is mercantilism and why is this an important
term?
Ans: A theory that suggests that the wealth of the world is fixed
and that a nation that exports more and imports less will be
richer.
12. **What are the critical features of the product life
cycle?**
Ans: 1. New stage: prod. of a new product (ex. TV) that
commands a price premium will concentrate in the USA, which
exports to other developed nations.
2. Maturing stage: demand & ability to prod.; grow in other dev.
nations (ex. Australia & Italy), it is now worthwhile to produce
there.
3. Standardized stage: the prev. new prod. is standardized (or
commoditized).
Prod. will now move to low-cost dev. nations, which export to dev.
nations. In other words, comparative advantage may change over
time.
13. How would you describe strategic trade?
Ans: Intervention by governments in certain industries can
enhance their odds for international success.
14. **How are supply and demand related to the exchange
rate of a country?**-
Ans: The price of a commodity, a country's currency, is
fundamentally determined by this. Strong demand leads to price
hikes; oversupply results in price drops.
15. Which theory came first, mercantilism or modern-day
protectionism?
