WGU C211 Global Economics for Managers Study Guide 2026 |
Complete Review | Graded A+
1. Which is the correct definition for Foreign Direct Investment ( FDI ) ?
FDI is when a company or government entity purchases or leases
existing production facilities to launch a new production activity .
FDI is a controlling ownership in a business enterprise in one
country by an entity based in another country .
FDI is when a domestic firm expand its operations to a foreign country
either via Green field Investment , merger / acquisition and / or
expansion of an existing foreign facility .
FDI is where a parent company starts a new venture in a foreign
country by constructing new operational facilities from the ground up .
2. Describe the relationship between price changes and quantity demanded in
a market characterized by elastic demand.
In a market with elastic demand, quantity demanded remains constant
regardless of price changes.
In a market with elastic demand, quantity demanded changes more
than the price change, meaning that a small price increase leads to
a large decrease in quantity demanded.
In a market with elastic demand, quantity demanded changes less
than the price change.
In a market with elastic demand, quantity demanded increases with
price increases.
3. Fiscal policy refers to:
the determination of the nation's money supply.
, policy directed toward increasing exports and reducing imports.
government policies aimed at changing the underlying structure or
institutions of the economy.
decisions to determine the government's budget.
4. What does the 'Pendulum' view on globalization imply about its fluctuations?
It remains constant without significant changes.
It is influenced solely by technological advancements.
It swings from one extreme to another from time to time.
It gradually moves towards a single direction.
5. Describe how marginal cost affects a producer's decision-making process.
Marginal cost is the same as average cost in all production scenarios.
Marginal cost only applies to large-scale production and not to small
businesses.
Marginal cost is irrelevant to production decisions as it does not affect
total costs.
Marginal cost influences a producer's decision to increase or
decrease production based on the cost of producing one more unit
compared to the revenue generated.
6. What is foreign direct investment?
Investments in other countries in which investors have no role in
managing the assets.
A loan made directly to a foreign ruler.
A loan intended to bypass corrupt officials by going straight to a
targeted industry.
, An investment in which a company maintains control of its assets in
another country.
A loan from the International Monetary Fund made directly to a
country's central bank.
7. How do institutions influence individual and firm behaviors?
Institutions exert control by reducing formal laws.
Institutions create chaos by promoting opportunism, defined as self-
interest seeking with guile.
Institutions separate individuals and firms into categories by forcing
them to choose between pillars.
Institutions reduce uncertainty by signaling what conduct is
legitimate and acceptable.
8. What is the relationship between government spending and aggregate
demand?
It decreases aggregate demand.
It has no effect on aggregate demand.
It raises aggregate demand.
It only affects supply.
9. How does absolute advantage differ from comparative advantage in
international trade?
Absolute advantage focuses on overall productivity, while
comparative advantage considers opportunity costs.
Absolute advantage is about trade barriers, while comparative
advantage is about tariffs.
, Both concepts are identical and mean the same thing.
Absolute advantage applies only to developed nations, while
comparative advantage applies to developing nations.
10. If Country A has an absolute advantage in producing cars and Country B has
an absolute advantage in producing textiles, how should they approach
trade to maximize their economic benefits?
Neither country should engage in trade as they both have
advantages.
Both countries should produce both goods equally.
Country A should specialize in cars and Country B in textiles, then
trade.
Country A should produce textiles and Country B should produce
cars.
11. Describe the significance of foreign direct investment (FDI) in international
business.
FDI is significant because it eliminates all risks associated with
international trade.
FDI is significant because it only benefits the home country of the
investor.
FDI is significant as it allows companies to establish a presence in
foreign markets, facilitating access to resources and new customer
bases.
FDI is significant as it restricts competition in the local market.
12. What are property rights in the context of economics?
Rights to own intellectual property
Complete Review | Graded A+
1. Which is the correct definition for Foreign Direct Investment ( FDI ) ?
FDI is when a company or government entity purchases or leases
existing production facilities to launch a new production activity .
FDI is a controlling ownership in a business enterprise in one
country by an entity based in another country .
FDI is when a domestic firm expand its operations to a foreign country
either via Green field Investment , merger / acquisition and / or
expansion of an existing foreign facility .
FDI is where a parent company starts a new venture in a foreign
country by constructing new operational facilities from the ground up .
2. Describe the relationship between price changes and quantity demanded in
a market characterized by elastic demand.
In a market with elastic demand, quantity demanded remains constant
regardless of price changes.
In a market with elastic demand, quantity demanded changes more
than the price change, meaning that a small price increase leads to
a large decrease in quantity demanded.
In a market with elastic demand, quantity demanded changes less
than the price change.
In a market with elastic demand, quantity demanded increases with
price increases.
3. Fiscal policy refers to:
the determination of the nation's money supply.
, policy directed toward increasing exports and reducing imports.
government policies aimed at changing the underlying structure or
institutions of the economy.
decisions to determine the government's budget.
4. What does the 'Pendulum' view on globalization imply about its fluctuations?
It remains constant without significant changes.
It is influenced solely by technological advancements.
It swings from one extreme to another from time to time.
It gradually moves towards a single direction.
5. Describe how marginal cost affects a producer's decision-making process.
Marginal cost is the same as average cost in all production scenarios.
Marginal cost only applies to large-scale production and not to small
businesses.
Marginal cost is irrelevant to production decisions as it does not affect
total costs.
Marginal cost influences a producer's decision to increase or
decrease production based on the cost of producing one more unit
compared to the revenue generated.
6. What is foreign direct investment?
Investments in other countries in which investors have no role in
managing the assets.
A loan made directly to a foreign ruler.
A loan intended to bypass corrupt officials by going straight to a
targeted industry.
, An investment in which a company maintains control of its assets in
another country.
A loan from the International Monetary Fund made directly to a
country's central bank.
7. How do institutions influence individual and firm behaviors?
Institutions exert control by reducing formal laws.
Institutions create chaos by promoting opportunism, defined as self-
interest seeking with guile.
Institutions separate individuals and firms into categories by forcing
them to choose between pillars.
Institutions reduce uncertainty by signaling what conduct is
legitimate and acceptable.
8. What is the relationship between government spending and aggregate
demand?
It decreases aggregate demand.
It has no effect on aggregate demand.
It raises aggregate demand.
It only affects supply.
9. How does absolute advantage differ from comparative advantage in
international trade?
Absolute advantage focuses on overall productivity, while
comparative advantage considers opportunity costs.
Absolute advantage is about trade barriers, while comparative
advantage is about tariffs.
, Both concepts are identical and mean the same thing.
Absolute advantage applies only to developed nations, while
comparative advantage applies to developing nations.
10. If Country A has an absolute advantage in producing cars and Country B has
an absolute advantage in producing textiles, how should they approach
trade to maximize their economic benefits?
Neither country should engage in trade as they both have
advantages.
Both countries should produce both goods equally.
Country A should specialize in cars and Country B in textiles, then
trade.
Country A should produce textiles and Country B should produce
cars.
11. Describe the significance of foreign direct investment (FDI) in international
business.
FDI is significant because it eliminates all risks associated with
international trade.
FDI is significant because it only benefits the home country of the
investor.
FDI is significant as it allows companies to establish a presence in
foreign markets, facilitating access to resources and new customer
bases.
FDI is significant as it restricts competition in the local market.
12. What are property rights in the context of economics?
Rights to own intellectual property
