Question 1

Draw a graph showing the effects of both a tariff and a quota. Who benefits from these policies? Who suffers?

Accepted Answer

A graph showing the effects of both a tariff and a quota would have two intersecting lines. The first line would represent the supply and demand for a good without any trade restrictions, and the second line would represent the supply and demand with either a tariff or a quota in place.

The effects of a tariff would be shown as a shift in the supply curve upwards, resulting in a higher price for the good and a decrease in the quantity traded. The effects of a quota would be shown as a restriction on the quantity of the good that can be imported, resulting in a higher price and a decrease in the quantity traded.

In both cases, the domestic producers of the good would benefit from the trade restrictions, as they would be able to sell their goods at a higher price. However, consumers would suffer as they would have to pay more for the good and have access to a smaller quantity. Additionally, foreign producers would also suffer as they would have reduced access to the domestic market.

Overall, the government imposing the tariff or quota would benefit from increased revenue or protection of domestic industries, while domestic producers would benefit from higher prices. However, consumers and foreign producers would suffer from higher prices and reduced access to the market.

Question 2

Which country is not a member of MERCOSUR?

Accepted Answer

A)  Brazil 
B)  Mexico 
C)  Uruguay 
D)  Paraguay 
E)  Argentina 
A)  Brazil 
B)  Mexico 
C)  Uruguay 
D)  Paraguay 
E)  Argentina B

Question 3

A tariff that is measured as a percentage of the value of the imported good is known as:

Accepted Answer

A)  ad valorem tariff 
B)  ad valorem equivalent 
C)  protective tariff 
D)  revenue tariff 
E)  specific tariff 
A)  ad valorem tariff 
B)  ad valorem equivalent 
C)  protective tariff 
D)  revenue tariff 
E)  specific tariff A

Question 4

In a labor-abundant country, trade would tend to:

Accepted Answer

A)  increase the price of capital. 
B)  increase the price of labor. 
C)  decrease the price of labor. 
D)  increase income inequality. 
E)  none of the above 
A)  increase the price of capital. 
B)  increase the price of labor. 
C)  decrease the price of labor. 
D)  increase income inequality. 
E)  none of the above

Question 5

The countries of Latin America were slow to join:

Accepted Answer

A)  the IMF. 
B)  the World Bank. 
C)  the United Nations. 
D)  the OAS. 
E)  GATT. 
A)  the IMF. 
B)  the World Bank. 
C)  the United Nations. 
D)  the OAS. 
E)  GATT.

Question 6

During the early part of the 20th century, Latin America redirected its trade relations away from the _____ and towards the _____.

Accepted Answer

A)  U.S.; Germany 
B)  Asia; U.S. 
C)  U.S.; Asia 
D)  U.K.; U.S. 
E)  U.K.; Japan 
A)  U.S.; Germany 
B)  Asia; U.S. 
C)  U.S.; Asia 
D)  U.K.; U.S. 
E)  U.K.; Japan

Question 7

Using the basic Hecksher-Ohlin model of trade, explain why Latin America would have a comparative disadvantage in capital-intensive products.

Accepted Answer

The basic Hecksher-Ohlin model of trade

Question 8

A quota is worse than a tariff because:

Accepted Answer

A)  imports are lower. 
B)  producer surplus does not increase. 
C)  of a loss of government revenue. 
D)  all of the above 
E)  none of the above 
A)  imports are lower. 
B)  producer surplus does not increase. 
C)  of a loss of government revenue. 
D)  all of the above 
E)  none of the above

Question 9

The Golden Age of Latin American economic history covered the period from:

Accepted Answer

A)  1494 to 1650. 
B)  1650 to 1820. 
C)  1820 to 1850. 
D)  1870 to 1914. 
E)  1946 to 1973. 
A)  1494 to 1650. 
B)  1650 to 1820. 
C)  1820 to 1850. 
D)  1870 to 1914. 
E)  1946 to 1973.

Question 10

Freer trade in Latin America was hindered by the countries of the region being late to join the:

Accepted Answer

A)  IMF. 
B)  WTO. 
C)  the World Bank. 
D)  the Interamerican Development Bank 
E)  none of the above 
A)  IMF. 
B)  WTO. 
C)  the World Bank. 
D)  the Interamerican Development Bank 
E)  none of the above

Question 11

Which of the following is a customs union in South America?

Accepted Answer

A)  GATT 
B)  WTO 
C)  NAFTA 
D)  DR-CAFTA 
E)  MERCOSUR 
A)  GATT 
B)  WTO 
C)  NAFTA 
D)  DR-CAFTA 
E)  MERCOSUR

Question 12

What is a K/L ratio? Why is it important for Latin America?

Accepted Answer

The K/L ratio typically refers to the ca

Question 13

If a worker in Chile earns 100 pesos per day producing four widgets and a worker in Bolivia earns 50 pesos per day producing 2 widgets, then:

Accepted Answer

A)  unit labor costs are the same in both countries. 
B)  unit labor costs are lower in Chile. 
C)  unit labor costs are lower in Bolivia. 
D)  one cannot determine unit labor costs. 
E)  widgets should be produced in Venezuela. 
A)  unit labor costs are the same in both countries. 
B)  unit labor costs are lower in Chile. 
C)  unit labor costs are lower in Bolivia. 
D)  one cannot determine unit labor costs. 
E)  widgets should be produced in Venezuela.

Question 14

A country will have a ________ in goods whose production uses its relatively ______ factor of production.

Accepted Answer

A)  comparative advantage, scare 
B)  comparative advantage, abundant 
C)  absolute advantage, scare 
D)  absolute advantage, abundant 
E)  comparative disadvantage, abundant 
A)  comparative advantage, scare 
B)  comparative advantage, abundant 
C)  absolute advantage, scare 
D)  absolute advantage, abundant 
E)  comparative disadvantage, abundant

Question 15

The HO model predicts that Latin America would be a major exporter of labor-intensive products. Why hasn't this happened? How has this affected the distribution of income in the region?

Accepted Answer

The HO model, or Heckscher-Ohlin model,

Question 16

Describe how trade based on comparative advantage could make the distribution of income in Latin America less unequal.

Accepted Answer

Trade based on comparative advantage cou

Question 17

How would trade based on comparative advantage tend to reduce income inequality in Latin America? How would import substitution policies tend to worsen it?

Accepted Answer

Trade based on comparative advantage ten

Question 18

Which of the following is the term used to describe the negative effects on countries that are not part of a trade agreement?

Accepted Answer

A)  trade creation 
B)  trade diversion 
C)  trade marginalization 
D)  ex ante trade 
E)  ex post trade 
A)  trade creation 
B)  trade diversion 
C)  trade marginalization 
D)  ex ante trade 
E)  ex post trade

Question 19

If the tariff on components is lower than the tariff on the final product then:

Accepted Answer

A)  the nominal tariff is zero. 
B)  the final product receives low protection. 
C)  consumers will clearly benefit. 
D)  the effective rate of protection on the final product is higher than it looks. 
E)  all of the above 
A)  the nominal tariff is zero. 
B)  the final product receives low protection. 
C)  consumers will clearly benefit. 
D)  the effective rate of protection on the final product is higher than it looks. 
E)  all of the above

Question 20

How do the terms of trade affect Latin America considering that the majority of exports are commodities?

Accepted Answer

The terms of trade refer to the ratio at

Draw a graph showing the effects of both a tariff and a quota. Who benefits from these policies? Who suffers?

Which country is not a member of MERCOSUR?

A tariff that is measured as a percentage of the value of the imported good is known as:

In a labor-abundant country, trade would tend to:

The countries of Latin America were slow to join:

During the early part of the 20^th century, Latin America redirected its trade relations away from the _ and towards the _.

Using the basic Hecksher-Ohlin model of trade, explain why Latin America would have a comparative disadvantage in capital-intensive products.

A quota is worse than a tariff because:

The Golden Age of Latin American economic history covered the period from:

Freer trade in Latin America was hindered by the countries of the region being late to join the:

Which of the following is a customs union in South America?

What is a K/L ratio? Why is it important for Latin America?

If a worker in Chile earns 100 pesos per day producing four widgets and a worker in Bolivia earns 50 pesos per day producing 2 widgets, then:

A country will have a __ in goods whose production uses its relatively factor of production.

The HO model predicts that Latin America would be a major exporter of labor-intensive products. Why hasn't this happened? How has this affected the distribution of income in the region?

Describe how trade based on comparative advantage could make the distribution of income in Latin America less unequal.

How would trade based on comparative advantage tend to reduce income inequality in Latin America? How would import substitution policies tend to worsen it?

Which of the following is the term used to describe the negative effects on countries that are not part of a trade agreement?

If the tariff on components is lower than the tariff on the final product then:

How do the terms of trade affect Latin America considering that the majority of exports are commodities?

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Exchange-Rate Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

Exam 7: Latin American Trade Policy

Draw a graph showing the effects of both a tariff and a quota. Who benefits from these policies? Who suffers?

Which country is not a member of MERCOSUR?

A tariff that is measured as a percentage of the value of the imported good is known as:

In a labor-abundant country, trade would tend to:

The countries of Latin America were slow to join:

During the early part of the 20th century, Latin America redirected its trade relations away from the _____ and towards the _____.

Using the basic Hecksher-Ohlin model of trade, explain why Latin America would have a comparative disadvantage in capital-intensive products.

A quota is worse than a tariff because:

The Golden Age of Latin American economic history covered the period from:

Freer trade in Latin America was hindered by the countries of the region being late to join the:

Which of the following is a customs union in South America?

What is a K/L ratio? Why is it important for Latin America?

If a worker in Chile earns 100 pesos per day producing four widgets and a worker in Bolivia earns 50 pesos per day producing 2 widgets, then:

A country will have a ________ in goods whose production uses its relatively ______ factor of production.

The HO model predicts that Latin America would be a major exporter of labor-intensive products. Why hasn't this happened? How has this affected the distribution of income in the region?

Describe how trade based on comparative advantage could make the distribution of income in Latin America less unequal.

How would trade based on comparative advantage tend to reduce income inequality in Latin America? How would import substitution policies tend to worsen it?

Which of the following is the term used to describe the negative effects on countries that are not part of a trade agreement?

If the tariff on components is lower than the tariff on the final product then:

How do the terms of trade affect Latin America considering that the majority of exports are commodities?

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Exchange-Rate Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

During the early part of the 20^th century, Latin America redirected its trade relations away from the _ and towards the _.

A country will have a __ in goods whose production uses its relatively factor of production.