WGU C211 OA GLOBAL ECONOMICS EXAM
REVIEW QUESTIONS AND VERIFIED
SOLUTIONS
◉ Features of the product life cycle.
Answer: New, Maturing, and Standardized
◉ Strategic trade.
Answer: Intervention by governments in certain industries can
enhance their odds for international success.
◉ How are supply and demand related to the exchange rate of a
country?.
Answer: 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.
◉ Which theory came first?.
Answer: Mercantilism (although both are of the idea that
governments should actively protect domestic industries from
imports and vigorously promote exports)
,◉ If a company seeks to limit foreign exchange rate exposure in the
forward direction, what is the most effective way to do this?.
Answer: Forward transactions, an act know as currency hedging.
◉ Transaction risk.
Answer: The exchange rate risk associated with the time delay
between entering into a contract and settling it.
◉ Hedging.
Answer: A transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the spot
rate.
◉ Currency hedging.
Answer: A way to protect traders and investors from being exposed
to the fluctuations of the spot rate
◉ Strategic hedging.
Answer: A means of spreading out activities in different currency
zones in order to offset the currency losses in certain regions
through gains in other regions (currency diversification)
◉ First mover advantages.
, Answer: Proprietary, technological leadership, pre-emption of scarce
resources, establishment of entry barriers to late entrants,
avoidance of clash with dominant firms at home, relationships with
key stakeholders, (such as governments.)
◉ Late mover advantages.
Answer: Opportunity to free ride on first-mover investments,
Resolution of technological and market uncertainty, First mover's
difficulty to adapt to market changes.)
◉ Foreign market entries types.
Answer: Non-equity and equity
◉ Non-equity.
Answer: Reflects relatively smaller commitments to overseas
markets. Determines firms MNE status.
◉ Equity.
Answer: indicative of relatively larger, harder-to-reverse
commitments. Determines firms MNE status.
◉ How do institutions reduce uncertainty?.
Answer: Establish "rules of the game" that economic players play by.
A standard to follow in order to survive and prosper. By signaling
REVIEW QUESTIONS AND VERIFIED
SOLUTIONS
◉ Features of the product life cycle.
Answer: New, Maturing, and Standardized
◉ Strategic trade.
Answer: Intervention by governments in certain industries can
enhance their odds for international success.
◉ How are supply and demand related to the exchange rate of a
country?.
Answer: 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.
◉ Which theory came first?.
Answer: Mercantilism (although both are of the idea that
governments should actively protect domestic industries from
imports and vigorously promote exports)
,◉ If a company seeks to limit foreign exchange rate exposure in the
forward direction, what is the most effective way to do this?.
Answer: Forward transactions, an act know as currency hedging.
◉ Transaction risk.
Answer: The exchange rate risk associated with the time delay
between entering into a contract and settling it.
◉ Hedging.
Answer: A transaction, such as forward transactions, that protects
traders and investors from exposure to the fluctuations of the spot
rate.
◉ Currency hedging.
Answer: A way to protect traders and investors from being exposed
to the fluctuations of the spot rate
◉ Strategic hedging.
Answer: A means of spreading out activities in different currency
zones in order to offset the currency losses in certain regions
through gains in other regions (currency diversification)
◉ First mover advantages.
, Answer: Proprietary, technological leadership, pre-emption of scarce
resources, establishment of entry barriers to late entrants,
avoidance of clash with dominant firms at home, relationships with
key stakeholders, (such as governments.)
◉ Late mover advantages.
Answer: Opportunity to free ride on first-mover investments,
Resolution of technological and market uncertainty, First mover's
difficulty to adapt to market changes.)
◉ Foreign market entries types.
Answer: Non-equity and equity
◉ Non-equity.
Answer: Reflects relatively smaller commitments to overseas
markets. Determines firms MNE status.
◉ Equity.
Answer: indicative of relatively larger, harder-to-reverse
commitments. Determines firms MNE status.
◉ How do institutions reduce uncertainty?.
Answer: Establish "rules of the game" that economic players play by.
A standard to follow in order to survive and prosper. By signaling
