C211 Global Economics for Managers Practice Questions - Set 2 - Part 1

Test your knowledge of Global Economics for Managers concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: What is the economic term for an investment in controlling and managing value-added activities in other countries?

a) Foreign direct investment (FDI)

b) Portfolio investment

c) Joint venture

d) Export investment

Question 2: What is the term for an innovation that is first adopted in emerging economies and then spreads globally?

a) Disruptive innovation

b) Reverse innovation

c) Breakthrough innovation

d) Incremental innovation

Question 3: What does GDP stand for?

a) Gross Direct Production

b) Global Domestic Product

c) Gross Domestic Product

d) General Domestic Productivity

Question 4: Which country does not fix its currency in the international market?

a) Brazil

b) Mexico

c) China

d) South Korea

Question 5: Which term describes a firm that engages in foreign direct investment (FDI)?

a) Transnational company

b) Multinational enterprise (MNE)

c) Global firm

d) International business

Question 6: What is the balance of payments equation for the current account?

a) Current account = trade balance + net capital flows

b) Current account = exports - imports + capital transfers

c) Current account = balance of trade + net factor income from abroad + net unilateral transfers

d) Current account = foreign direct investment + imports - exports

Question 7: What term refers to the act of seeking self-interest with guile?

a) Corruption

b) Deception

c) Opportunism

d) Dishonesty

Question 8: What percentage of the world's foreign exchange transactions are in U.S. dollars?

a) 50%

b) 65%

c) 80%

d) 90%

Question 9: What term is used to describe tariffs levied on goods sold below cost to eliminate local competition?

a) Dumping

b) Price setting

c) Price collusion

d) Antidumping duty

Question 10: What is the name of the group of North America, Western Europe, and Japan in the context of international trade?

a) Triad

b) BRICA

c) Four Tigers

d) G-20

Question 11: What does 'PPP' stand for in international economics?

a) Purchasing Power Projection

b) Price Productivity Parity

c) Purchasing Power Parity

d) Price Parity Policy

Question 12: What theory suggests that countries should specialize in economic activities where they have a relative advantage over others?

a) Comparative Advantage

b) Absolute Advantage

c) Factor Endowment

d) Competitive Advantage

Question 13: What term describes the theory that countries gain by focusing on economic activities in which they have an absolute advantage?

a) Comparative advantage theory

b) Absolute advantage theory

c) Mercantilism

d) Resource-based theory

Question 14: What is the primary function of the International Monetary Fund (IMF)?

a) Regulate world trade

b) Promote international monetary cooperation

c) Set global exchange rates

d) Provide development loans to emerging economies

Question 15: What is the risk that foreign firms face due to their non-native status in host countries?

a) Market failure risk

b) Liability of foreignness

c) Country-specific risk

d) Expropriation risk

Question 16: What does the term 'opportunity cost' refer to?

a) The direct cost of producing a good

b) The cost of pursuing one activity over another

c) The financial cost of an investment

d) The cost of shifting resources between industries

Question 17: What is the legal system that relies on comprehensive statutes and codes to form legal judgments?

a) Common law

b) Theocratic law

c) Civil law

d) Customary law

Question 18: What percentage of the world's foreign exchange transactions are conducted in U.S. dollars?