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Q.

1 Full form of GDP and what is the difference between GDP per Capita
Ans:
The full form of GDP is Gross Domestic Product.
I.
II.
III.

GDP is a measure of a nation as economic health while GDP per capita takes into account
the reflection of such economic health into an individual citizen as perspective.
GDP measures the nation as wealth while GDP per capita roughly determines the standard
of living in a particular country.
GDP normally increases as the population increase while GDP per capita may decrease
when population increases.

Q.2. Define or explain Purchase Power Parity in two lines


Ans:
An economic theory that estimates the amount of adjustment needed on the exchange rate between
countries in order for the exchange to be equivalent to each currency's purchasing power.
The relative version of PPP is calculated as S= P1/P2
Where:
"S" represents exchange rate of currency 1 to currency 2
"P1" represents the cost of good "x" in currency 1
"P2" represents the cost of good "x" in currency 2

Q.3 Which of these are Formal Institutions and Informal Institutions.


Ans:
I.
II.

Formal Institutions: Laws, Regulations, Rules


Informal Institution: Ethics, Culture, Norms

Q.4 Name two countries under Theocratic Laws:


Ans: Afghanistan, Iran, Sudan, Yemen
Q.5 Name at least two of the three kinds of economies:
Ans: Command Economies, Market Economies, Traditional Economies
Q.6. Name two characteristics each of Low Context and High Context cultures:
Ans:
Low Context: Tend to make shallower, short-term relationship, Quick Change
High Context: Value traditions, Are slow to change

Q.7. Expand SWOT and VRIO

Ans:
SWOT: The SWOT analysis is used to describe the Strength, Weakness, Opportunities, Threats. The
purpose of this analysis is to identify the particular competencies that the corporation has as well as to
identify the opportunities that they are facing but unable to take advantage of due to the lack of
necessary resources.
VRIO: VRIO is an initialism for the four question framework asked about a resource or capability to
determine its competitive potential: the question of Value, the question of Rarity, the question
of imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the
resource or capability)
Q.8. Name at least two out of 3 each of the Classic Based Theories and Firm Based Theories.
Ans:
Classic Based Theories: Mercantilism, Absolute advantage, Comparative Advantage
Firm Based Theories: Factor Proportion Trade, Country Similarity, Global Strategic Revalry
Q.9. Difference between Horizontal and Vertical FDI
Ans:
Horizontal FDI refers to the type of direct investment between industrialized countries as ways to avoid
trade barriers, gain better access to the local economy, or draw on technical expertise in the area by
locating near other established firms. Vertical FDI, by contrast, occurs when a firm in an industrialized
country lowers cost by relocating the production process to low-wage countries.
Q. 10. In foreign exchange terminology what is spot and forward
Ans:
A spot contract is a contract that involves the purchase or sale of a commodity, security or currency for
immediate delivery and payment on the spot date, which is normally two business days after the trade
date. The spot price is the price quoted for the immediate settlement of the spot contract.
Unlike a spot contract, a forward contract is a contract that involves an agreement of contract terms
on the current date with the delivery and payment at a specified future date. Contrary to a spot rate,
a forward rate is used to quote a financial transaction that takes place on a future date and is the
settlement price of a forward contract. However, depending on the security being traded, the forward
rate can be calculated using the spot rate.

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