WGU C211 OBJECTIVE ASSESSMENT GLOBAL
ECONOMICS FOR MANAGERS EXAM SCRIPT
2026 COMPLETE QUESTIONS AND ANSWERS
◉ What is Foreign Direct Investment? Answer: Investment in
controlling and managing value-added activities in other countries.
◉ What different political views exist on FDI? Answer: 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.
◉ What benefits exist to a country receiving FDI? Answer: 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? Answer: -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? Answer: Strong resources and capabilities
help to compete and/or cooperate more effectively.
, ◉ What is resource similarity and how does this impact competitive
dynamics? Answer: 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.
Answer: Mercantilism, absolute advantage, comparative advantage
◉ How would the modern theory compare to the classical theory?
Answer: 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? Answer: 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)
ECONOMICS FOR MANAGERS EXAM SCRIPT
2026 COMPLETE QUESTIONS AND ANSWERS
◉ What is Foreign Direct Investment? Answer: Investment in
controlling and managing value-added activities in other countries.
◉ What different political views exist on FDI? Answer: 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.
◉ What benefits exist to a country receiving FDI? Answer: 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? Answer: -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? Answer: Strong resources and capabilities
help to compete and/or cooperate more effectively.
, ◉ What is resource similarity and how does this impact competitive
dynamics? Answer: 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.
Answer: Mercantilism, absolute advantage, comparative advantage
◉ How would the modern theory compare to the classical theory?
Answer: 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? Answer: 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)
