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| Section | Objectives |
|---|---|
| Key Topics Across All Competencies | - Supply and Demand Shifts - Currency Appreciation and Depreciation - Elastic vs. Inelastic Goods - Foreign Direct Investment (FDI) Impacts - Global Business Strategies and Porter's Framework - International Trade Policies (Tariffs, Quotas) |
| Competency 1: International Trade and Currency Exchange | - Introduction to International Trade Theories - Currency Exchange Rate Determination - Impact of Interest Rates on Financial Flows and Exchange Rates |
| Competency 3: Economic Decision-Making by Firms and Customers | - Firm Behavior Under Different Market Structures (Perfect Competition, Monopoly, Oligopoly) - Consumer Behavior (Budget Constraint, Indifference Curves) |
| Competency 2: Political and Economic Forces | - Property Rights and the Rule of Law - Market Economy vs. Command Economy |
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NEW QUESTION # 135
What are features shared by monopolies and perfect competition? (Choose TWO.)
Answer: D,E
Explanation:
In Global Economics for Managers , monopolies and perfectly competitive firms share two important features: profit maximization at MR = MC and the ability to earn economic profits in the short run , making options E and F correct.
Option E applies universally: all firms maximize profit where marginal revenue equals marginal cost , regardless of market structure. This decision rule guides output choices in both monopoly and perfect competition.
Option F is also correct because firms in both structures can earn economic profits in the short run . In perfect competition, short-run profits attract new entrants, while monopolies may sustain profits longer due to entry barriers.
Options A and B distinguish the two structures. Option C applies only to monopoly. Option D applies only to monopoly, not perfect competition.
Thus, options E and F correctly identify shared features.
NEW QUESTION # 136
What is a characteristic of common law as compared to civil law?
Answer: C
Explanation:
InGlobal Economics for Managers,common lawsystems are distinguished by their heavy reliance onjudicial precedents, making option B correct. Under common law, judges interpret and apply the law by referring to outcomes of prior court cases. These precedents guide future rulings and allow the legal system to evolve incrementally over time.
This contrasts withcivil lawsystems, which emphasize comprehensive legal codes and statutes enacted by legislatures. In civil law countries, judges apply written laws more strictly and have less discretion to create legal interpretations based on prior cases.
For managers, the distinction matters because common law systems often provide greater flexibility and adaptability but may also involve higher legal uncertainty and litigation costs. Civil law systems offer clearer rules but less flexibility.
Thus, option B correctly identifies a defining characteristic of common law.
NEW QUESTION # 137
Which term best describes an economic condition in which a nation exports more than it imports?
Answer: D
Explanation:
A trade surplus occurs when a country exports more goods and services than it imports during a given period.
This means foreign buyers purchase more from the country than the country purchases from abroad. Option A is correct because it accurately describes a positive balance of trade. A trade deficit is the opposite condition, where imports exceed exports. Mercantilism is an older trade theory that emphasized accumulating wealth through exports and limiting imports, but it is not the term for the actual trade-balance condition. Resource mobility refers to the ability of labor, capital, or other resources to move from one use or industry to another.
For managers, trade surpluses can affect currency strength, export opportunities, and international competitiveness.
NEW QUESTION # 138
What is true about gross domestic product (GDP)?
Answer: B
Explanation:
InGlobal Economics for Managers,gross domestic product (GDP)is widely regarded asthe single best available measure of a society's economic well-being, making option A correct. GDP measures the total market value of all final goods and services produced within a country's borders during a given period.
Although GDP has limitations-it does not account for income distribution, environmental degradation, or non-market activities-it remains the most comprehensive and consistent indicator of economic performance across countries and over time.
Option B is incorrect because inflation is measured by price indices such as the GDP deflator or the consumer price index (CPI), not by GDP growth. Option C is incorrect because GDP values goods and services at market prices without weighting one more heavily than the other. Option D is incorrect because GDP excludes income earned by citizens working abroad; that income is included in gross national income (GNI), not GDP.
Global Economics for Managersemphasizes that GDP is particularly useful for comparing economic output and living standards internationally, especially when adjusted for purchasing power parity.
Thus, option A correctly describes GDP.
NEW QUESTION # 139
A country has seen an increase in inflation. What is the effect on the country's currency exchange rate?
Answer: B
Explanation:
An increase in inflation generally reduces the value of a country's currency relative to other currencies.
Higher inflation lowers purchasing power because domestic goods and services become more expensive compared with foreign alternatives. As the country's exports become less competitive and imports become relatively more attractive, demand for the domestic currency tends to fall. Under purchasing power parity logic, currencies of countries with higher inflation tend to depreciate over time. Option D is therefore correct.
Option B is incorrect because currency appreciation is more commonly associated with lower inflation, higher productivity, or higher real interest rates. Option A is too rigid because inflation is one of the major determinants of exchange-rate movement. Option C is weaker than D because the expected direction is depreciation.
NEW QUESTION # 140
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