Question 1

The concept of "economic pessimism" stems from

Accepted Answer

A) the theory and empirical fact which states that developing nations face declining export prices relative to increasing import prices. 
B) the fact that economic growth in an era of globalization is difficult to attain. 
C) the fact that smaller countries would not enjoy comparative advantage unless they are allowed to subsidize some of their industries. 
D) the fact that it is impossible to achieve desired economic development without adopting full democratic principles. 
E) None of the above. 
A) the theory and empirical fact which states that developing nations face declining export prices relative to increasing import prices. 
B) the fact that economic growth in an era of globalization is difficult to attain. 
C) the fact that smaller countries would not enjoy comparative advantage unless they are allowed to subsidize some of their industries. 
D) the fact that it is impossible to achieve desired economic development without adopting full democratic principles. 
E) None of the above. A

Question 2

According to Prebisch and other ISI theoreticians,countries should begin to shift their comparative advantage away from primary commodity production by first producing

Accepted Answer

A) industrial goods such as pumps and generators. 
B) complex consumer goods such as autos and appliances. 
C) advanced industrial goods such as chemical and electronics. 
D) simple consumer goods such as food products and textiles. 
E) minerals and agricultural products. 
A) industrial goods such as pumps and generators. 
B) complex consumer goods such as autos and appliances. 
C) advanced industrial goods such as chemical and electronics. 
D) simple consumer goods such as food products and textiles. 
E) minerals and agricultural products. D

Question 3

The Baker Plan for addressing the debt crisis was based on the assumption that

Accepted Answer

A) most countries would eventually default on their debt. 
B) forgiveness of some of the debt was inevitable. 
C) renewed lending by U.S.and European banks would undermine push for economic reforms. 
D) hyperinflation would eventually reduce the real value of the debt. 
E) renewed lending by U.S.and European banks would restore growth and make the debt manageable. 
A) most countries would eventually default on their debt. 
B) forgiveness of some of the debt was inevitable. 
C) renewed lending by U.S.and European banks would undermine push for economic reforms. 
D) hyperinflation would eventually reduce the real value of the debt. 
E) renewed lending by U.S.and European banks would restore growth and make the debt manageable. E

Question 4

The terms of trade are

Accepted Answer

A) the terms negotiated in a trade agreement. 
B) exports plus imports divided by GDP. 
C) the value of the real exchange rate. 
D) taxes plus transaction costs paid on imports. 
E) the ratio of export prices to import prices. 
A) the terms negotiated in a trade agreement. 
B) exports plus imports divided by GDP. 
C) the value of the real exchange rate. 
D) taxes plus transaction costs paid on imports. 
E) the ratio of export prices to import prices.

Question 5

The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices.

Accepted Answer

A) True 
 B)False

Question 6

The difference between an orthodox stabilization plan and a heterodox stabilization plan is that the orthodox plan

Accepted Answer

A) targets the problem of inflation,while the heterodox plan targets unemployment. 
B) reduces trade flows less than the heterodox plan. 
C) does not include higher taxes and the heterodox plan does. 
D) does not include wage and price controls and the heterodox plan does. 
E) eliminates budget deficits,while the heterodox plan only reduces them. 
A) targets the problem of inflation,while the heterodox plan targets unemployment. 
B) reduces trade flows less than the heterodox plan. 
C) does not include higher taxes and the heterodox plan does. 
D) does not include wage and price controls and the heterodox plan does. 
E) eliminates budget deficits,while the heterodox plan only reduces them.

Question 7

The first phase of a typical cycle of economic populism is usually

Accepted Answer

A) hyperinflation. 
B) rising growth and rising wages. 
C) falling growth and falling wages. 
D) rising unemployment. 
E) severe disinflation. 
A) hyperinflation. 
B) rising growth and rising wages. 
C) falling growth and falling wages. 
D) rising unemployment. 
E) severe disinflation.

Question 8

The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America.

Accepted Answer

A) True 
 B)False

Question 9

The main difference between stabilization policies and structural reform policies is that stabilization policies

Accepted Answer

A) focus on microeconomic issues and structural reform policies focus on the macroeconomic environment. 
B) focus on macroeconomic issues and structural reform policies focus on the microeconomic environment. 
C) are rarely used by reform governments;they prefer to use structural reform policies in their place. 
D) have smaller economic impacts than structural reform policies. 
E) create less unemployment than structural reform policies. 
A) focus on microeconomic issues and structural reform policies focus on the macroeconomic environment. 
B) focus on macroeconomic issues and structural reform policies focus on the microeconomic environment. 
C) are rarely used by reform governments;they prefer to use structural reform policies in their place. 
D) have smaller economic impacts than structural reform policies. 
E) create less unemployment than structural reform policies.

Question 10

What benefits did an overvalued currency offer a domestic economy in the ISI period? Which sectors were typically harmed by overvalued currencies?

Accepted Answer

Overvalued exchange rates made it easier

Question 11

Which four nations account for most of the population and economic activity in Latin America?

Accepted Answer

Brazil;Mex

Question 12

Proponents of ISI assumed that governments

Accepted Answer

A) were capable of identifying and correcting market failures. 
B) were capable of identifying and correcting the excesses of economic populists. 
C) should enact orthodox stabilization plans. 
D) could control the terms of trade. 
E) Both A and D. 
A) were capable of identifying and correcting market failures. 
B) were capable of identifying and correcting the excesses of economic populists. 
C) should enact orthodox stabilization plans. 
D) could control the terms of trade. 
E) Both A and D.

Question 13

Import substitution industrialization in Latin America

Accepted Answer

A) relied on increased exports. 
B) provided subsidies for exports. 
C) shifted the bulk of exports away from primary commodities. 
D) created disincentives to export. 
E) Answers A and C are correct. 
A) relied on increased exports. 
B) provided subsidies for exports. 
C) shifted the bulk of exports away from primary commodities. 
D) created disincentives to export. 
E) Answers A and C are correct.

Question 14

Rent seeking

Accepted Answer

A) is unlikely the more heavily engaged government planners are with the economy. 
B) is more likely where institutions are strong. 
C) is not likely to lead to waste and efficiency. 
D) is more likely when government policy creates something of value that government officials are charged with distributing. 
A) is unlikely the more heavily engaged government planners are with the economy. 
B) is more likely where institutions are strong. 
C) is not likely to lead to waste and efficiency. 
D) is more likely when government policy creates something of value that government officials are charged with distributing.

Question 15

ISI policies were brought to an end primarily by

Accepted Answer

A) their inability to solve the crises of the 1980s. 
B) authoritarian governments interested in total control over the economy. 
C) populist politicians. 
D) the growing perception that they were creating long-term economic inefficiencies. 
E) Both A and D. 
A) their inability to solve the crises of the 1980s. 
B) authoritarian governments interested in total control over the economy. 
C) populist politicians. 
D) the growing perception that they were creating long-term economic inefficiencies. 
E) Both A and D.

Question 16

Latin America has more trade agreements than any other region,and it has some of the oldest as well.

Accepted Answer

A) True 
 B)False

Question 17

A heterodox model would not call for freezing wages and prices,but an orthodox one would.

Accepted Answer

A) True 
 B)False

Question 18

An orthodox model calls for cutting government spending,reforming the tax system to increase compliance and revenues,and limiting the creation of new money.

Accepted Answer

A) True 
 B)False

Question 19

The reform movements that began in many Latin American economies in the late 1980s favored

Accepted Answer

A) competitive devaluations. 
B) stronger military budgets. 
C) imports substitution policies. 
D) a stronger role for markets and more openness. 
E) more government regulation of industry. 
A) competitive devaluations. 
B) stronger military budgets. 
C) imports substitution policies. 
D) a stronger role for markets and more openness. 
E) more government regulation of industry.

Question 20

What is called for with heterodox stabilization policies?

Accepted Answer

Calls for government spending

The concept of "economic pessimism" stems from

According to Prebisch and other ISI theoreticians,countries should begin to shift their comparative advantage away from primary commodity production by first producing

The Baker Plan for addressing the debt crisis was based on the assumption that

The terms of trade are

The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices.

The difference between an orthodox stabilization plan and a heterodox stabilization plan is that the orthodox plan

The first phase of a typical cycle of economic populism is usually

The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America.

The main difference between stabilization policies and structural reform policies is that stabilization policies

What benefits did an overvalued currency offer a domestic economy in the ISI period? Which sectors were typically harmed by overvalued currencies?

Which four nations account for most of the population and economic activity in Latin America?

Proponents of ISI assumed that governments

Import substitution industrialization in Latin America

Rent seeking

ISI policies were brought to an end primarily by

Latin America has more trade agreements than any other region,and it has some of the oldest as well.

A heterodox model would not call for freezing wages and prices,but an orthodox one would.

An orthodox model calls for cutting government spending,reforming the tax system to increase compliance and revenues,and limiting the creation of new money.

The reform movements that began in many Latin American economies in the late 1980s favored

What is called for with heterodox stabilization policies?

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters

Exam 15: Trade and Policy Reform in Latin America

The concept of "economic pessimism" stems from

According to Prebisch and other ISI theoreticians,countries should begin to shift their comparative advantage away from primary commodity production by first producing

The Baker Plan for addressing the debt crisis was based on the assumption that

The terms of trade are

The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices.

The difference between an orthodox stabilization plan and a heterodox stabilization plan is that the orthodox plan

The first phase of a typical cycle of economic populism is usually

The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America.

The main difference between stabilization policies and structural reform policies is that stabilization policies

What benefits did an overvalued currency offer a domestic economy in the ISI period? Which sectors were typically harmed by overvalued currencies?

Which four nations account for most of the population and economic activity in Latin America?

Proponents of ISI assumed that governments

Import substitution industrialization in Latin America

Rent seeking

ISI policies were brought to an end primarily by

Latin America has more trade agreements than any other region,and it has some of the oldest as well.

A heterodox model would not call for freezing wages and prices,but an orthodox one would.

An orthodox model calls for cutting government spending,reforming the tax system to increase compliance and revenues,and limiting the creation of new money.

The reform movements that began in many Latin American economies in the late 1980s favored

What is called for with heterodox stabilization policies?

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters