WGU C211 OA GLOBAL ECONOMICS FOR
MANAGERS PRACTICE EXAM 2026
QUESTIONS AND VERIFIED SOLUTIONS
GUARANTEED PASS
⩥ 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)
⩥ What is mercantilism and why is this an important term? Answer: 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)
MANAGERS PRACTICE EXAM 2026
QUESTIONS AND VERIFIED SOLUTIONS
GUARANTEED PASS
⩥ 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)
⩥ What is mercantilism and why is this an important term? Answer: 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)
