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| Section | Objectives |
|---|---|
| Topic 1: Competency 3: Economic Decision-Making by Firms and Customers | - Consumer Behavior (Budget Constraint, Indifference Curves) - Firm Behavior Under Different Market Structures (Perfect Competition, Monopoly, Oligopoly) |
| Topic 2: Competency 1: International Trade and Currency Exchange | - Impact of Interest Rates on Financial Flows and Exchange Rates - Introduction to International Trade Theories - Currency Exchange Rate Determination |
| Topic 3: Key Topics Across All Competencies | - Foreign Direct Investment (FDI) Impacts - Global Business Strategies and Porter's Framework - Elastic vs. Inelastic Goods - Currency Appreciation and Depreciation - Supply and Demand Shifts - International Trade Policies (Tariffs, Quotas) |
| Topic 4: Competency 2: Political and Economic Forces | - Property Rights and the Rule of Law - Market Economy vs. Command Economy |
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NEW QUESTION # 74
Managers and firms rationally pursue their interests and make choices within institutional constraints.
Which situation illustrates this proposition of the institution-based view of global business?
Answer: D
Explanation:
InGlobal Economics for Managers, a core proposition of theinstitution-based viewis that firms make rational decisionswithin institutional constraints, making option C correct.
When a country raises its minimum wage, labor costs increase due to a formal institutional change. A multinational firm responding by relocating production to a lower-cost country demonstrates rational behavior shaped by institutional rules.
Options A, B, and D reflect competitive strategy but do not directly involve institutional constraints.
Therefore, option C correctly illustrates the institution-based view.
NEW QUESTION # 75
What are characteristics of a market economy? (Choose TWO.)
Answer: E,F
Explanation:
InGlobal Economics for Managers, amarket economyis characterized by decentralized decision making and reliance on market forces, making optionsB and Ecorrect.
Option B is correct becauseAdam Smith, inThe Wealth of Nations(1776), laid the intellectual foundation for market economies. He argued that individuals pursuing their own self-interest unintentionally promote the overall welfare of society.
Option E correctly identifies the"invisible hand", a central concept in market economies. Prices, supply, and demand coordinate economic activity without centralized planning. Firms decide what to produce based on profitability, and consumers decide what to buy based on preferences and prices.
Options A, C, D, and F describecommand economies, where governments control production, pricing, and resource ownership-characteristics inconsistent with market economies.
Thus, B and E accurately describe defining features of a market economy.
NEW QUESTION # 76
What is a characteristic of a market economy?
Answer: A
Explanation:
A market economy is associated with limited government intervention and reliance on private decision making, often described as a laissez-faire approach. Option B is correct because laissez-faire means the government largely allows market forces to guide production, pricing, investment, and consumption. In a pure market system, private individuals and firms own resources and respond to price signals. Option A is incorrect because China under communism and the former Soviet Union are classic examples of command economies, not market economies. Option C is also a command-economy characteristic because it gives government the authoritative role. Option D is wrong for the same reason: state ownership of production factors belongs to command or socialist systems. Market economies emphasize private ownership and voluntary exchange.
NEW QUESTION # 77
Which statement describes one of the three views of globalization?
Answer: D
Explanation:
Globalization can be viewed from different perspectives. One view treats globalization as a relatively new force that has intensified in recent decades due to major advances in technology, transportation, communication, global finance, and international trade liberalization. This view emphasizes that modern globalization is different from earlier cross-border exchange because firms, consumers, capital markets, and supply chains are now connected at much greater speed and scale. Option B is correct because it captures the
"recent force" view of globalization. Option A is too idealistic because globalization creates both benefits and costs. Option C is incorrect because globalization is not primarily an agreement to prevent wars. Option D is also incorrect because globalization often increases innovation through competition and knowledge transfer.
NEW QUESTION # 78
What does the Federal Reserve do to expand aggregate demand? (Choose TWO.)
Answer: B,D
Explanation:
InGlobal Economics for Managers, the Federal Reserve expands aggregate demand byincreasing the money supplyandlowering interest rates, making options B and C correct.
Increasing the money supply provides banks with more reserves, encouraging lending. Lower interest rates stimulate borrowing by households and firms, increasing consumption and investment. Both channels raise aggregate demand.
The remaining options contract demand rather than expand it. Therefore, B and C are correct.
NEW QUESTION # 79
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