WGU C211 GLOBAL ECONOMICS EXAM
SCRIPT 2026 TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ Which of the following is NOT a nontariff trade barrier (NTB)?
Answer: Cultural distance
◉ Chile requires 50 units of resource to produce one ton of wine and
20 units of resource to produce one ton of blueberries. France
requires 30 units of resource to produce one ton of wine and 40
units of resource to produce one ton of blueberries. Which of the
following is true? Answer: France has a comparative advantage in
wine.
◉ Which of the following theories does NOT lead to the conclusion
that unrestricted free trade is in the best interests of all countries?
Answer: Strategic trade theory
◉ Free trade is defined as: Answer: The idea that market forces
should determine how much to trade with little or no government
intervention.
,◉ According to the theory of absolute advantage, under free trade,
Answer: each nation gains by specializing in economic activities in
which a nation has absolute advantage.
◉ Which of the following is NOT a nontariff trade barrier (NTB)?
Answer: Cultural distance
◉ Protectionism is similar to mercantilism as they both advocated
_____. Answer: government involvement in international trade
◉ OLI advantages refer to a firm's quest for _____via FDI. Answer:
ownership advantages, location advantages, and internalization
advantages
◉ MNEs' possession and leveraging of certain valuable, rare, hard-
to-imitate, and organizationally embedded (VRIO) assets overseas in
the context of FDI refer to _____. Answer: ownership
◉ Firms prefer FDI to licensing because FDI_____. Answer: provides
the firm with direct ownership to its foreign assets
◉ Which of the following political perspectives maintains the view
that FDI has both pros and cons and can only be approved when its
benefits outweigh costs? Answer: Pragmatic nationalism
,◉ Which of the following is a benefit of FDI to home countries?
Answer: Learning from operations
◉ Which of the following foreign exchange transactions provide
protection to traders and investors from being exposed to
fluctuations of the spot rate? Answer: 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. Answer: Currency swap
◉ Foreign exchange rates are influenced by: Answer: Interest rates
and money supply.
Relative price differences and purchasing power parity.
Supply and demand of the currencies.
◉ A savvy global business manger must understand the following
concepts to be considered literate about foreign exchange: Answer:
Understand the factors that influence exchange rates
Understand the ways to hedge currency risks
Understand the foreign exchange market
, ◉ Which of the following are the primary types of foreign exchange
transactions made by financial companies? Answer: Swaps, spot
transactions, forward transactions
◉ A home appliance manufacturer located in The Netherlands
decides to open two new manufacturing plants, one in Poland and
the other in Thailand. Its purpose is to offset currency losses
through: Answer: strategic hedging
◉ Why do managers, at some of the largest global corporations, fail
to engage in currency hedging? Answer: They believe that the
protection against fluctuations in exchange rates is not worth the
potentially high cost of currency hedging.
◉ Risk analysis of any country must include an analysis of the
country's: Answer: currency risks
◉ With regard to foreign market entry, the resource-based view
argues that foreign firms need to Answer: deploy overwhelming
resources and capabilities to offset their liability of foreignness.
◉ Which of the following is a first-mover advantage? Answer:
Avoidance of clash with a dominant firm at home
SCRIPT 2026 TEST PAPER QUESTIONS AND
SOLUTIONS GRADED A+
◉ Which of the following is NOT a nontariff trade barrier (NTB)?
Answer: Cultural distance
◉ Chile requires 50 units of resource to produce one ton of wine and
20 units of resource to produce one ton of blueberries. France
requires 30 units of resource to produce one ton of wine and 40
units of resource to produce one ton of blueberries. Which of the
following is true? Answer: France has a comparative advantage in
wine.
◉ Which of the following theories does NOT lead to the conclusion
that unrestricted free trade is in the best interests of all countries?
Answer: Strategic trade theory
◉ Free trade is defined as: Answer: The idea that market forces
should determine how much to trade with little or no government
intervention.
,◉ According to the theory of absolute advantage, under free trade,
Answer: each nation gains by specializing in economic activities in
which a nation has absolute advantage.
◉ Which of the following is NOT a nontariff trade barrier (NTB)?
Answer: Cultural distance
◉ Protectionism is similar to mercantilism as they both advocated
_____. Answer: government involvement in international trade
◉ OLI advantages refer to a firm's quest for _____via FDI. Answer:
ownership advantages, location advantages, and internalization
advantages
◉ MNEs' possession and leveraging of certain valuable, rare, hard-
to-imitate, and organizationally embedded (VRIO) assets overseas in
the context of FDI refer to _____. Answer: ownership
◉ Firms prefer FDI to licensing because FDI_____. Answer: provides
the firm with direct ownership to its foreign assets
◉ Which of the following political perspectives maintains the view
that FDI has both pros and cons and can only be approved when its
benefits outweigh costs? Answer: Pragmatic nationalism
,◉ Which of the following is a benefit of FDI to home countries?
Answer: Learning from operations
◉ Which of the following foreign exchange transactions provide
protection to traders and investors from being exposed to
fluctuations of the spot rate? Answer: 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. Answer: Currency swap
◉ Foreign exchange rates are influenced by: Answer: Interest rates
and money supply.
Relative price differences and purchasing power parity.
Supply and demand of the currencies.
◉ A savvy global business manger must understand the following
concepts to be considered literate about foreign exchange: Answer:
Understand the factors that influence exchange rates
Understand the ways to hedge currency risks
Understand the foreign exchange market
, ◉ Which of the following are the primary types of foreign exchange
transactions made by financial companies? Answer: Swaps, spot
transactions, forward transactions
◉ A home appliance manufacturer located in The Netherlands
decides to open two new manufacturing plants, one in Poland and
the other in Thailand. Its purpose is to offset currency losses
through: Answer: strategic hedging
◉ Why do managers, at some of the largest global corporations, fail
to engage in currency hedging? Answer: They believe that the
protection against fluctuations in exchange rates is not worth the
potentially high cost of currency hedging.
◉ Risk analysis of any country must include an analysis of the
country's: Answer: currency risks
◉ With regard to foreign market entry, the resource-based view
argues that foreign firms need to Answer: deploy overwhelming
resources and capabilities to offset their liability of foreignness.
◉ Which of the following is a first-mover advantage? Answer:
Avoidance of clash with a dominant firm at home
