WGU C211 Global Economics Final
Exam Questions and Answers 100%
Correct
ability-to-pay principle ✔✔the idea that taxes should be levied on a person according to how well
that person can shoulder the burden
absolute advantage ✔✔The economic advantage one nation enjoys that is absolutely superior to
other nations.
absorptive capacity ✔✔The ability to recognize the value of new information, assimilate it, and
apply it.
accommodative strategy ✔✔A strategy characterized by some support from top managers, who
may increasingly view CSR as a worthwhile endeavor.
accounting profit ✔✔total revenue minus total explicit cost
acquisition ✔✔A transfer of the control of operations and management from one firm (target) to
another (acquirer), the former becoming a unit of the latter.
acquisition premium ✔✔The difference between the acquisition price and the market value of
target firms.
adaptability ✔✔The ability to change supply chain configurations in response to longer-term
changes in the environment and technology.
Administrative policies ✔✔Bureaucratic rules that make it harder to import foreign goods.
,Adverse selection ✔✔the tendency for the mix of unobserved attributes to become undesirable
from the standpoint of an uninformed party
agency costs ✔✔The costs associated with principal-agent relationships.
agency relationship ✔✔The relationship between principals (such as shareholders) and agents
(such as professional managers).
Agency theory ✔✔A theory that focuses on principal-agent relationships (or in short, agency
relationships).
Agent ✔✔A person (such as manager) to whom authority is delegated.
agglomeration ✔✔Clustering of economic activities in certain locations.
aggregate-supply curve ✔✔a curve that shows the quantity of goods and services that firms choose
to produce and sell at each price level
Agility ✔✔The ability to react quickly to unexpected shifts in supply and demand.
Alignment ✔✔Alignment of interests of various players.
Andean Community ✔✔A customs union in South America that was launched in 1969.
antidumping duties ✔✔Tariffs levied on imports that have been "dumped" (selling below costs to
"unfairly" drive domestic firms out of business).
,Antidumping law ✔✔Law that makes it illegal for an exporter to sell goods below cost abroad
with the intent to raise prices after eliminating local rivals.
antitrust law ✔✔Law that outlaws cartels (trusts).
antitrust policy ✔✔Government policy designed to combat monopolies and cartels.
APEC ✔✔The official title for regional economic integration involving 21 member economies
around the Pacific.
appreciation ✔✔an increase in the value of a currency as measured by the amount of foreign
currency it can buy
Arrow's impossibility theorem ✔✔a mathematical result showing that, under certain assumed
conditions, there is no scheme for aggregating individual preferences into a valid set of social
preferences
Asia-Pacific Economic Cooperation (APEC) ✔✔The official title for regional economic
integration involving 21 member economies around the Pacific.
Association of Southeast Asian Nations (ASEAN) ✔✔The organization underpinning regional
economic integration in Southeast Asia.
attack ✔✔An initial set of actions to gain competitive advantage.
Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA/CER) ✔✔A
free trade agreement between Australia and New Zealand that was launched in 1983.
, Automatic stabilizers ✔✔changes in fiscal policy that stimulate aggregate demand when the
economy goes into a recession without policymakers having to take any deliberate action
Average fixed cost ✔✔fixed cost divided by the quantity of output
average revenue ✔✔total revenue divided by the quantity sold
average tax rate ✔✔total taxes paid divided by total income
average total cost ✔✔total cost divided by the quantity of output
average variable cost ✔✔variable cost divided by the quantity of output
balance of payments ✔✔A country's international transaction statement, which includes
merchandise trade, service trade, and capital movement.
balance of trade ✔✔The aggregation of importing and exporting that leads to the country-level
trade surplus or deficit.
balance sheet approach ✔✔A compensation approach that balances the cost of living differences
relative to parent country levels and adds a financial inducement to make the package attractive.
balanced trade ✔✔a situation in which exports equal imports
bandwagon effect ✔✔The effect of investors moving in the same direction at the same time, like
a herd.
bank capital ✔✔the resources a bank's owners have put into the institution
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