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WGU Global Economics for Managers (C211, UZC2) Sample Questions:

1. Which methods does the Federal Reserve use to alter reserve quantities? Choose three answers.

A) Raising inflation
B) Raising income tax rates
C) Buying bonds
D) Raising the discount rate
E) Selling bonds
F) Selling stock shares

2. Which situation illustrates the proposition that when formal constraints are unclear or fail, informal constraints play a larger role in reducing uncertainty and providing constancy to firms?

A) Firms relocating overseas due to a new domestic tax policy
B) A firm follows strict environmental practices despite lax local laws
C) Choosing a headquarters location based on cost of living, airports, and tax credits
D) Firms entering gray markets due to high taxes

3. How does the Federal Reserve lower the federal funds rate?

A) By selling government bonds
B) By increasing taxes
C) By purchasing government bonds
D) By raising reserve requirements

4. What measures how the quantity demanded of one good responds to a change in the price of another good?

A) Quantity elasticity of demand
B) Cross-price elasticity of demand
C) Equilibrium elasticity of demand
D) Price elasticity of demand

5. Managers and firms rationally pursue their interests and make choices within institutional constraints. This is one of the two core propositions underpinning an institution-based view of global business. Which situation illustrates this proposition?

A) Several businesses relocate overseas because of a new domestic tax policy that will increase their tax liability by 15%.
B) Two failing banks are pursuing the option of being acquired by another institution. One bank is able to leverage political relationships to result in a successful acquisition. The other bank pursues no such political solution and eventually files for bankruptcy.
C) When a company opens a new production facility, company leaders find out that the laws of that country may allow it to skip several important safety steps. In doing so, the cost of production goes down, but there is a risk to the surrounding environment. The leaders decide not to skip these safety steps out of a deep concern and commitment to environmental protection.
D) Government corruption is rampant in a particular country, leading to a high cost of doing business.However, some smaller companies have figured out how to legally evade the most fraudulent abuses, and for them the cost of doing business becomes much cheaper. For this reason, the companies stay and have a lucrative decade.

Solutions: