WGU C211 EXAM STUDY GUIDE WITH 100% CORRECT ANSWERS(VERIFIED FOR ACCURACY)

The term "emerging economies" has replaced the term developing countries The gross domestic product plus the income from non-resident sources abroad gives the gross national product Which of the following countries would be characterized as an emerging economy? Brazil More than 25% of global GDP comes from BRICS countries Viewing the global economy as a pyramid, the Triad refers to North America, Western Europe, and Japan People who earn _____ a year comprise the base of the global economic pyramid. less than $2,000 Which of the following would be an example of a top down innovation? Lowering prices and features of existing products to meet emerging market needs Which of the following is true of the Group of 20 (G-20) It only has 19 member countries. Which of the following does the institution-based view of global business lay emphasis on? Understanding the laws and values of the firm's host nation The resource-based view of global business differs from the institution-based view of global business in that the resource-based view _____ focuses on the internal strengths on the firm The liability of foreignness is the inherent disadvantage faced by _____ foreign firms in host nations due to their non-native status Which of the following is true of globalization according to the "new force" perspective? It is a western ideology focused on exploiting and dominating the world through MNEs The concept of _____ suggests that barriers to market integration at borders are high, but not high enough to completely insulate countries from each other semiglobalization The strategy of treating each country as a unique market and in total isolation is referred to as _____ localization MNEs from the Triad dominate the list of the 500 largest MNEs; their share has been _____ shrinking The term "emerging economies" has replaced the term _____ developing countries A conversion that determines the equivalent amount of goods and services that different currencies can buy is known as _____ purchasing power parity Which of the following countries would be characterized as an emerging economy? Brazil More than 25% of global GDP comes from _____ BRICS countries Which of the following countries is represented in the Triad of the global economic pyramid? Japan People who earn _____ a year comprise the base of the global economic pyramid. less than $2,000 A _____ is defined as an innovation that is adopted first in emerging economies and then diffused around the world reverse innovation Which of the following is true of the Group of 20 (G-20) It only has 19 member countries The _____ view suggests that the success and failure of firms are largely determined by their environments institution-based The _____ view of global business focuses on internal factors that can help a firm overcome its external environment resource-based Which of the following is true of globalization according to the "pendulum view" perspective? Globalization is a not a one-directional phenomenon. The concept of _____ suggests that barriers to market integration at borders are high, but not high enough to completely insulate countries from each other. semiglobalization _____ is the strategy of treating the entire world as one market. Standardization Protectionism is similar to mercantilism as they both advocated _____. government involvement in international trade The _____ principle advocated that governments should actively protect domestic industries from imports and vigorously promote exports. protectionism Which of the following is a modern trade theory? National competitive advantage Which of the following trade theories divides the nations of the world into three categories? Product life cycle Which of the following was the first international trade theory to account for changes in the patterns of trade over time? Product life cycle theory In the third stage of the product life cycle theory, the _____. product is standardized Which of the following describes resource mobility as assumed by the classical theories of international trade? It is the assumption that a resource used in producing a product for one industry can be shifted and put to use in another industry. The theory of comparative advantage _____. explains patterns of trade based on factor endowments Deadweight costs are net losses that occur when _____ are imposed. import tariffs _____ are government payments to domestic firms. Subsidies Which of the following is true of voluntary export restraints? It is an export quota levied by a country on the quantity of its exports. Which of the following is true of voluntary export restraints? It is an export quota levied by a country on the quantity of its exports. _____ are tariffs levied on imports sold below costs to drive domestic firms out of business. Antidumping duties FPI refers to the _____. investment in a portfolio of foreign securities that do not entail the active management of foreign assets A vertical FDI refers to a type of FDI in which _____ a firm moves upstream or downstream at different value chain stages in a host country _____ refers to the total accumulation of inbound FDI in a country or outbound FDI from a country. FDI stock OLI advantages refer to a firm's quest for _____via FDI ownership advantages, location advantages, and internalization advantage _____ refers to the replacement of cross-border markets with one firm locating in two or more countries. Internalization Firms prefer FDI to licensing because FDI_____ provides the firm with direct ownership to its foreign assets _____ refers to the clustering of economic activities in certain locations. Agglomeration The television industry in the United States is controlled by seven giant corporations: The Walt Disney Company, CBS Corporation, Viacom, Comcast, Hearst Corporation, Time Warner, and News Corporation. Thus, the television industry in the U.S. is a typical _____ industry. oligopolistic Which of the following economic perspectives on FDI has its principles rooted in Marxism? The radical view Which of the following is a benefit of FDI to home countries? Learning from operations _____ refers to the deal struck by MNEs and host governments, which change their requirements after the initial FDI entry Obsolescing bargain Costs that a firm has to endure even when its investment turns out to be unsatisfactory are referred to as _____. sunk costs A _____ is the price of one currency, such as the dollar, in terms of another, such as the euro. foreign exchange rate Which of the following conditions will attract foreign funds into a country? If the country's interest rate is relatively high compared to other countries _____ is a country's international transaction statement, which includes merchandise trade, service trade, and capital movement. Balance of payments Which of the following types of exchange rate policies is apt for a pure free market economy? Clean float The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____. fixed exchange rate policy In foreign exchange, a(n) _____ is said to have occurred when investors move in the same direction at the same time, like a herd. bandwagon effect Between 1870 and 1914, the value of most major currencies was maintained by fixing their prices in terms of _____. gold Which of the following was true of the Bretton Woods system? All currencies were pegged at a fixed rate to the dollar. The weight a member country carries within the IMF, which determines the amount of its financial contribution, its capacity to borrow from the IMF, and its voting power is referred to as a(n) _____. quota _____ allow participants to buy and sell currencies now for future delivery. Forward transactions _____ is defined as the conversion of one currency into another at Time 1, with an agreement to revert it back to the original currency at a specific Time 2 in the future. Currency swap _____ refers to non-financial companies spreading out its activities in different currency zones in order to offset the currency losses in certain regions through gains in other regions. Strategic hedging A currency board is a monetary authority that issues notes and coins convertible into a key foreign currency at a _____ exchange rate. fixed A manager arguing against currency hedging would most likely argue that _____. currency hedging eats into company profits Liability of foreignness is _____. the inherent disadvantage foreign firms experience in host countries _____ refers to the clustering of economic activities in certain locations. Agglomeration Which of the following conforms to the notion put forward by the school of thought associated with stage models? Firms enter culturally distant countries in later stages when they may gain more confidence. Which of the following is a first-mover advantage? Avoidance of clash with a dominant firm at home _____ refers to the amount of resources committed to entering a foreign market. Scale of entry The distinction between _____ is what defines an MNE from a firm that merely exports or imports. equity and non-equity modes of entry Which of the following is a non-equity mode of entry? Turnkey projects Which of the following entry modes is a type of strategic alliance? Licensing Which of the following is an advantage of R&D contracts? Ability to tap into the best, cost-effective locations Which of the following is true of indirect exports? They export through domestically based export intermediaries. A(n) _____ is a non-equity mode of entry used to build a longer-term presence by building and then operating a facility for a period of time before transferring operations to a domestic agency or firm. BOT agreement Greenfield operations are similar to acquisitions in that they are both examples of _____. wholly owned subsidiaries The country-of-origin effect refers to _____. the positive or negative perception of firms and products from a certain country The process of anticipating rivals' actions in order to both revise a firm's plan and prepare to deal with rivals' response is called _____. competitor analysis _____ occurs when firms engage the same rivals in numerous markets. Multimarket competition