C211 GLOBAL ECONOMICS – PA
LEGITIMATE/VERIFIED QUESTIONS AND
ANSWERS
One view of globalization claims that human civilization has always had some type of
globalization. Which view is it?
a) The long-run historical view
b) The pendulum view
c) The business-over-culture view
d) The unique-role view - ✔✔a) The long-run historical view
The benefit attributed to firms that enter a market before other firms in the same market
segment is best described by which term?
a) First-mover advantage
b) Trade advantage
c) Absolute advantage
d) Scale advantage - ✔✔a) First-mover advantage
What is opportunity cost?
a) The lost potential from pursuing one activity at the expense of another activity, given
the alternatives
b) The extent to which different countries possess various factors of production such as
labor, land, and technology
c) A government payment to a domestic firm
d) A net loss that occurs in an economy as a result of tariffs - ✔✔a) The lost potential
from pursuing one activity at the expense of another activity, given the alternatives
What are costs to home countries of foreign direct investment? Choose two.
a) capital outflow
b) job loss
c) Reduced standard of living
d) Loss of intellectual property
e) Loss of sovereignty
f) Cultural disintegration - ✔✔a) capital outflow
b) job loss
Which strategy for responding to MNEs is appropriate in a situation in which there is low
industry pressure to globalize, and competitive assets are customized to home
markets?
a) Defender strategy
b) Contender strategy
c) Responder strategy
, d) Retainer strategy - ✔✔a) Defender strategy
What is one of the factors that is used to predict the rivalry between a pair of
competitors?
a) Resource similarity
b) Imitative behavior
c) Cost structure
d) Organizational structure - ✔✔a) Resource similarity
What is one of the elements of the Porter Diamond in the theory of national competitive
advantage of industries?
a) Domestic demand conditions
b) Foreign supply markets
c) Trade deficits
d) Firm opportunity costs - ✔✔a) Domestic demand conditions
What is the bandwagon effect?
a) The movement of investors in the same direction at the same time
b) A theory suggesting that the price for identical products sold in different countries
must be the same in the absence of trade barriers
c) The idea that a country's exchange rate is an indicator of socioeconomic well-being
d) The gain from taking advantage of inefficient exchange rates - ✔✔a) The movement
of investors in the same direction at the same time
A country has seen a decrease in inflation.What is the effect on the country's currency
exchange rate?
a) It increases.
b) It decreases
c) It remains same
d) It changes, but in an unknown direction - ✔✔a) It increases.
What is one of the three primary types of foreign exchange transactions?
a) Spot transactions
b) Straddles
c) Rooted transactions
d) Covered calls - ✔✔a) Spot transactions
Who are the primary and largest participants in the foreign exchange market?
a) Large international banks
b) Individual investors
c) Governments
d) Local banks - ✔✔a) Large international banks
Which company has a natural resource-seeking strategic goal?
a) A company searching for a location where there is an abundance of oil
LEGITIMATE/VERIFIED QUESTIONS AND
ANSWERS
One view of globalization claims that human civilization has always had some type of
globalization. Which view is it?
a) The long-run historical view
b) The pendulum view
c) The business-over-culture view
d) The unique-role view - ✔✔a) The long-run historical view
The benefit attributed to firms that enter a market before other firms in the same market
segment is best described by which term?
a) First-mover advantage
b) Trade advantage
c) Absolute advantage
d) Scale advantage - ✔✔a) First-mover advantage
What is opportunity cost?
a) The lost potential from pursuing one activity at the expense of another activity, given
the alternatives
b) The extent to which different countries possess various factors of production such as
labor, land, and technology
c) A government payment to a domestic firm
d) A net loss that occurs in an economy as a result of tariffs - ✔✔a) The lost potential
from pursuing one activity at the expense of another activity, given the alternatives
What are costs to home countries of foreign direct investment? Choose two.
a) capital outflow
b) job loss
c) Reduced standard of living
d) Loss of intellectual property
e) Loss of sovereignty
f) Cultural disintegration - ✔✔a) capital outflow
b) job loss
Which strategy for responding to MNEs is appropriate in a situation in which there is low
industry pressure to globalize, and competitive assets are customized to home
markets?
a) Defender strategy
b) Contender strategy
c) Responder strategy
, d) Retainer strategy - ✔✔a) Defender strategy
What is one of the factors that is used to predict the rivalry between a pair of
competitors?
a) Resource similarity
b) Imitative behavior
c) Cost structure
d) Organizational structure - ✔✔a) Resource similarity
What is one of the elements of the Porter Diamond in the theory of national competitive
advantage of industries?
a) Domestic demand conditions
b) Foreign supply markets
c) Trade deficits
d) Firm opportunity costs - ✔✔a) Domestic demand conditions
What is the bandwagon effect?
a) The movement of investors in the same direction at the same time
b) A theory suggesting that the price for identical products sold in different countries
must be the same in the absence of trade barriers
c) The idea that a country's exchange rate is an indicator of socioeconomic well-being
d) The gain from taking advantage of inefficient exchange rates - ✔✔a) The movement
of investors in the same direction at the same time
A country has seen a decrease in inflation.What is the effect on the country's currency
exchange rate?
a) It increases.
b) It decreases
c) It remains same
d) It changes, but in an unknown direction - ✔✔a) It increases.
What is one of the three primary types of foreign exchange transactions?
a) Spot transactions
b) Straddles
c) Rooted transactions
d) Covered calls - ✔✔a) Spot transactions
Who are the primary and largest participants in the foreign exchange market?
a) Large international banks
b) Individual investors
c) Governments
d) Local banks - ✔✔a) Large international banks
Which company has a natural resource-seeking strategic goal?
a) A company searching for a location where there is an abundance of oil
