WGU D080 OA, Exam Questions With 100% Correct Answers | Latest 2023/2024 Graded A+

What are the advantages of a mixed economy? - Answer mirror those of the market economy in that goods and services are distributed where they are most needed. Prices are set by supply and demand, innovation is encouraged, and capital is allocated to the businesses that are the most innovative and efficient. A mixed economy minimizes the disadvantages of a market economy by having a more significant role for government intervention in the market. What are the disadvantages of a mixed economy? - Answer include too much government interference, too much or too little freedom of choice, the government restricting competition, and the country going into debt because of government intervention What is a legal risk? - Answer the likelihood that a trading partner will opportunistically break a contract or expropriate property rights What is civil law? - Answer Civil law is does not rely on case rulings and precedents. It is usually between individual plaintiffs and defendants. Most widespread law system in the world. What is Common law? - Answer law made by judges through their decisions, not through specific statutes What is religious law? - Answer Religious law is based on the interpretation of religious doctrines. One example is a requirement in Sharia that people following Sharia may not borrow money. To compensate for the inability to take on debt, an asset-based system has been established. WGU D080 study for OA With Complete Solutions Graded A+ What is the purpose of the IMF? - Answer The IMF helps maintain liquidity of global funding by providing a straight-forward method for nations to borrow and loan to each other through a mechanism called the special drawing right. To help ensure that the IMF loans are used for the intended purpose and repaid, the IMF sets conditions both before and during the loan phase. These conditions are not without controversy. The conditions put on the loan require the recipient country to have a policy of austerity. This policy, which usually results in a cut in funding for social programs, can have a significant effect on citizens who are living in poverty, according to critics of the IMF. Other criticisms of the IMF address a lack of representation by the global south, an overrepresentation by the United States, and environmental damage. What are criticisms of the world bank? - Answer The developed countries such as the U.S. and Europe have too much control over its decisions. What does the world bank do? - Answer The World Bank provides low-interest loans, interest-free credits, and conditional grants to developing countries in which a government (or sovereign) guarantees repayment. The World Bank Group is comprised of private lending banks as well as the World Bank. Some criticisms of the World Bank include: an imbalance of leadership power, enforced conditionality, and environmental impacts. What is the function of the WTO? - Answer WTO supports developing nations by providing both training and support. The WTO reviews the trade policies of all nations to ensure that each country is treated fairly and equally under the most favored nation requirement. Criticisms of the WTO Include a lack of equal trade, ensuring adoption of labor standards and rights, and ignoring environmental concerns. What is the criticism of the WTO? - Answer It protects developed countries more than developing countries. What is an embargo? - Answer an official ban on trade or other commercial activity with a particular country. What is mercantilism? - Answer An economic system where the government regulates trade for its own benefit at the expense of its rivals. What is a trade surplus? - Answer when a country exports more than it imports What is protectionism? - Answer the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports. What is an absolute advantage? - Answer The ability to produce more of a product with the same resources as your competitor. This is called an absolute advantage because you are just simply overall more productive. WGU D080 study for OA With Complete Solutions Graded A+ What is a comparative advantage? - Answer the ability to produce a good at a lower opportunity cost than another producer What is free trade? - Answer the movement of goods and services among nations without political or economic barriers eliminates imports and exports tariffs. What is the global strategy rivalry theory of barriers to entry? - Answer The obstacle that make it difficult for a new company to enter a given market. These barriers may include technology challenges, high start-up costs, or government regulations. How does free trade affect jobs? - Answer imports might injure workers in several different way: fewer jobs, lower wages, or poor working conditions. What does the NAFTA do? - Answer NAFTA eliminates trade barriers and tariffs, and quotas for trade between the US, Canada, and Mexico What is protectionism? - Answer Protectionism is the practice of shielding one or more industries within a country's economy from foreign competition through the use of tariffs or quotas. What are tariffs? - Answer Taxes on imported goods What is an import tariff? - Answer are taxes on goods that are imported into a country. They are more common than export tariffs. What are export tariffs? - Answer are taxes on goods that are leaving a country. Taxing exports may be implemented to raise tariff revenue or restrict the world supply of a good. What are protective tariffs? - Answer are tariffs levied to reduce imports of a product and protect domestic industries. What are revenue tariffs? - Answer are tariffs levied to raise revenue for the government. What are specific tariffs? - Answer are tariffs that levy a flat rate on each item imported. For example, a specific tariff would be a fixed $1,000 duty on every car imported into a country, regardless of how much the car costs. What are Ad valorem tariffs? - Answer are tariffs based on a percentage of the value of each item.4 The United States currently levies a 2.5% ad valorem tariff on imported automobiles. Thus, if $100,000 worth of automobiles is imported, the U.S. government collects $2,500 in tariff revenue. In this case, $2,500 is collected whether two $50,000 BMWs or ten $10,000 Hyundai's are imported.6 WGU D080 study for OA With Complete Solutions Graded A+ What are compound tariffs? - Answer are tariffs that are a combination of specific tariffs and ad valorem tariffs. For example, a compound tariff might consist of a fixed $100 duty plus 10% of the value of every imported car.4 What is a free trade result? - Answer when a foreign supplier can produce a product, such as steel, at a lower price, domestic suppliers will need to offer the same price to compete in the domestic market as they face global competition due to free trade. What happens when a tariff is added? - Answer The tariff raises prices of imported steel. The price will not go as high as the original domestic price, but will be higher than the price with free trade What are quotas? - Answer setting a limit on how many units of a certain product can be exported or imported. What is an absolute quota? - Answer is a limit on the number of specific goods that may enter a country during a certain period. Once the quota has been filled, no other goods may be imported into that country. What is a tariff-rate quota? - Answer is a two-tier quota system that combines characteristics of tariffs and quotas. Under a tariff-rate quota system, an initial quota of a good is allowed to enter the country at a lower duty rate. What is the effect of a quota? - Answer the domestic producer sells more steel than if there was free trade, so its revenues will go up. The increased revenue may trickle down to the workers in the steel industry in the form of increased jobs and wages. What are non tariff/quota barriers to trade? - Answer involve voluntary export restrictions that are a form of trade barrier by which foreign firms agree to limit the number of goods exported to a particular country. What are sanctions? - Answer are laws passed that restrict or abolish trade with certain countries. Trade sanctions are often imposed as a tactic in foreign and economic policy of another nation. What are embargos? - Answer Quotas that completely prohibit specified goods from entering or leaving a country What is an infant industry? - Answer a developing domestic industry that needs tariff protection What is antidumping? - Answer a business practice of trying to sell products at lower prices in the U.S. than those same products would bring in the supplier's home market OR selling the products at a lower price than the cost to manufacture them WGU D080 study for OA With Complete Solutions Graded A+ What is outsourcing? - Answer send much of the production work to these locations. Outsourcing is often a result of cheaper labor and easier systems of governance in those regions. What are the categories of international investment? - Answer There are two main categories of international investment - portfolio investment and foreign direct investment (FDI) What is Portfolio investment? - Answer refers to investing in a company's stocks, bonds, or assets, but not to control or direct the firms operations or management. What is foreign direct investment (FDI)? - Answer foreign direct investment refers to an investment in or the acquisition of foreign assets with the intent to control and manage them. several ways the company can make FDI's They can purchase the assets of an international company, invest in the company through new capital, or participate in a joint venture with a foreign company. How can and FDI be inward and outward? - Answer Inward FDI refers to an investment coming into the country. Outward FDI are investments made to companies from that country into foreign companies in other countries. How do Governments Encourage FDI? - Answer Governments seek to promote FDI when they are eager to expand their domestic economy and attract new technologies, business knowledge, and capital to their country. How do Governments discourage or restrict FDI's? - Answer Governments seek to limit or control FDI to protect local industries and critical resources (oil, minerals, etc.), preserve the national and local culture, protect segments of the domestic population, maintain political and economic independence, and manage or control economic growth. What should be considered when investing? - Answer economic growth rates (i.e., evidence of high product demand, and positive economic trends) exchange rate stability (i.e., ease of converting foreign revenue to home country dollars) health of the foreign banking system and interest rates (i.e., ease of loan approval) liquidity of the stock and bond market ("Globalization 101," n.d.) What is horizontal FDI? - Answer Horizontal FDI occurs when a company is trying to open a new market—a retailer, for example, that builds a store in a new country to sell to the local market. WGU D080 study for OA With Complete Solutions Graded A+ What is a vertical FDI? - Answer Vertical FDI is when a company invests internationally to provide input into its core operations—usually in its home country. A firm may invest in production facilities in another country. What is a backward FDI? - Answer When a firm brings the goods or components back to its home country (i.e., acting as a supplier), this is referred to as backward vertical FDI. What is a Forward FDI? - Answer When a firm sells the goods into the local or regional market (i.e., acting as a distributor), this is termed forward vertical FDI. What is a Greenfield FDI? - Answer Greenfield FDIs occur when multinational corporations enter into developing countries to build new factories or stores. These new facilities are built new—usually in an area where no previous facilities existed.