Question 1

Does it appear that currency boards make low-inflation policies credible?

Accepted Answer

Currency boards have the power to bring

Question 2

A trend that has been reinforced by many developing countries is privatization. Privatization refers to

Accepted Answer

A)  purchasing large companies and turning them into state-owned enterprises. 
B)  investing government money in large, privately-owned companies. 
C)  exchanging bonds for shares in state-owned enterprises. 
D)  selling large state-owned enterprises to private owners in the financial sector. 
E)  selling large state-owned enterprises to private owners in key areas such as electricity, telecommunications, or petroleum. 
A)  purchasing large companies and turning them into state-owned enterprises. 
B)  investing government money in large, privately-owned companies. 
C)  exchanging bonds for shares in state-owned enterprises. 
D)  selling large state-owned enterprises to private owners in the financial sector. 
E)  selling large state-owned enterprises to private owners in key areas such as electricity, telecommunications, or petroleum.

Question 3

Over the period 1960-2014, the United States economy grew at roughly

Accepted Answer

A)  2.1 percent. 
B)  3 percent. 
C)  4 percent. 
D)  one percent. 
E)  3.5 percent. 
A)  2.1 percent. 
B)  3 percent. 
C)  4 percent. 
D)  one percent. 
E)  3.5 percent.

Question 4

In the instances where a loan has been issued under certain terms and has to be repaid, what happens when the borrower does not uphold these stipulations?

Accepted Answer

A)  call 
B)  option 
C)  payment 
D)  default 
E)  fraud 
A)  call 
B)  option 
C)  payment 
D)  default 
E)  fraud

Question 5

The 1980s are considered as the "lost decade" of Latin American growth. Explain why?

Accepted Answer

Just as the Great Depression made it har

Question 6

A considerable advantage that richer countries have over poorer ones is exemplified by the fact that

Accepted Answer

A)  richer countries do not have to denominate their foreign debts in their own currencies. 
B)  richer countries have the ability to denominate their foreign debts in foreign currencies. 
C)  when demand falls for a poorer country's goods, this leads to a significant wealth transfer from foreigners to the poorer country, a kind of international insurance payment. 
D)  richer countries have the ability to denominate their foreign debts in their own currencies. 
E)  richer countries can extract trade advantages by using military power. 
A)  richer countries do not have to denominate their foreign debts in their own currencies. 
B)  richer countries have the ability to denominate their foreign debts in foreign currencies. 
C)  when demand falls for a poorer country's goods, this leads to a significant wealth transfer from foreigners to the poorer country, a kind of international insurance payment. 
D)  richer countries have the ability to denominate their foreign debts in their own currencies. 
E)  richer countries can extract trade advantages by using military power.

Question 7

Discuss the role of more "transparency" in reducing the risk of financial crisis.

Accepted Answer

Students should discuss the Asian crisis

Question 8

Brazil's 1999 crisis was relatively short lived because

Accepted Answer

A)  Brazil's financial institutions had avoided borrowing all together. 
B)  Brazil's financial institutions had avoided heavy borrowing in local currency. 
C)  Brazil's financial institutions had avoided heavy borrowing in dollars. 
D)  Brazil's financial institutions had extended low-interest loans. 
E)  Brazil's financial institutions had extended high-interest loans. 
A)  Brazil's financial institutions had avoided borrowing all together. 
B)  Brazil's financial institutions had avoided heavy borrowing in local currency. 
C)  Brazil's financial institutions had avoided heavy borrowing in dollars. 
D)  Brazil's financial institutions had extended low-interest loans. 
E)  Brazil's financial institutions had extended high-interest loans.

Question 9

Describe alternative forms of capital inflow to finance external deficits and explain why these methods were used in different times?

Accepted Answer

The capital inflows that finance develop

Question 10

If a developing country institutes a currency board, it relinquishes control over having

Accepted Answer

A)  monetary policy autonomy. 
B)  exchange rate stability. 
C)  freedom of capital movement. 
D)  freedom of labor movement. 
E)  all of its funds. 
A)  monetary policy autonomy. 
B)  exchange rate stability. 
C)  freedom of capital movement. 
D)  freedom of labor movement. 
E)  all of its funds.

Question 11

There are many ways developing countries finance their external deficits EXCEPT

Accepted Answer

A)  bank finance. 
B)  portfolio investment in ownership of firms. 
C)  bond finance. 
D)  official lending. 
E)  foreign exchange rates. 
A)  bank finance. 
B)  portfolio investment in ownership of firms. 
C)  bond finance. 
D)  official lending. 
E)  foreign exchange rates.

Question 12

One should expect ________ relationship between annual per-capita GDP and an inverse index of corruption.

Accepted Answer

A)  a weak and negative 
B)  a weak and positive 
C)  a strong and negative 
D)  a strong and positive 
E)  an unpredictable 
A)  a weak and negative 
B)  a weak and positive 
C)  a strong and negative 
D)  a strong and positive 
E)  an unpredictable

Question 13

Please consider Table 22-2 below.

Assuming constant Annual Average Growth Rate in the future, determine the year in which the United States will have the same output per capita as South Korea?

Accepted Answer

The answer of Please consider Table 22-2 below.
  ...

Question 14

Explain why East Asian countries have done so well relative to South American countries.

Accepted Answer

Mainly, the reasons are: less

Question 15

Why may equity finance be preferred to debt finance for developing countries?

Accepted Answer

A)  A fall in domestic income automatically reduces the earnings of foreign shareholders without violating any loan agreement. 
B)  There are laws insuring against any default with equity finance. 
C)  The risk is shared between debtor and creditor with debt finance. 
D)  The tax structure leaves equity finance unconstrained. 
E)  Repayments are unaffected by falls in real income. 
A)  A fall in domestic income automatically reduces the earnings of foreign shareholders without violating any loan agreement. 
B)  There are laws insuring against any default with equity finance. 
C)  The risk is shared between debtor and creditor with debt finance. 
D)  The tax structure leaves equity finance unconstrained. 
E)  Repayments are unaffected by falls in real income.

Question 16

List and explain 3 major channels through which developing countries have financed their external deficits.

Accepted Answer

Any of the 3 below along with

Question 17

In general, one would expect that life expectancies reflect international differences in income levels. Do the data support such a claim?

Accepted Answer

A)  Average life span falls as relative poverty falls. 
B)  Average life span increases as relative poverty falls. 
C)  There is no statistically significant relationship between the two. 
D)  The relation is not very strong. 
E)  The relationship looks more like a U-shape. 
A)  Average life span falls as relative poverty falls. 
B)  Average life span increases as relative poverty falls. 
C)  There is no statistically significant relationship between the two. 
D)  The relation is not very strong. 
E)  The relationship looks more like a U-shape.

Question 18

What are the main lessons economists learned from the developing country crisis?

Accepted Answer

(1) Choosing the right exchang

Question 19

Compare the macroeconomic performances in the 1990s of the following countries under the following exchange-rate regimes: floating exchange rates, Mexico and Brazil; capital control, China and Malaysia; and currency boards, Estonia and Hong Kong; dollarization, Argentina.

Accepted Answer

An open question. St

Question 20

The main factors that discourage investment in capital and skills in developing countries are

Accepted Answer

A)  political instability, insecure property rights. 
B)  political instability, insecure property rights, misguided economic policies. 
C)  political instability, misguided economic policies. 
D)  political instability. 
E)  insecure property rights, misguided economic policies. 
A)  political instability, insecure property rights. 
B)  political instability, insecure property rights, misguided economic policies. 
C)  political instability, misguided economic policies. 
D)  political instability. 
E)  insecure property rights, misguided economic policies.

Exam 22: Developing Countries: Growth, Crisis, and Reform

Does it appear that currency boards make low-inflation policies credible?

A trend that has been reinforced by many developing countries is privatization. Privatization refers to

Over the period 1960-2014, the United States economy grew at roughly

In the instances where a loan has been issued under certain terms and has to be repaid, what happens when the borrower does not uphold these stipulations?

The 1980s are considered as the "lost decade" of Latin American growth. Explain why?

A considerable advantage that richer countries have over poorer ones is exemplified by the fact that

Discuss the role of more "transparency" in reducing the risk of financial crisis.

Brazil's 1999 crisis was relatively short lived because

Describe alternative forms of capital inflow to finance external deficits and explain why these methods were used in different times?

If a developing country institutes a currency board, it relinquishes control over having

There are many ways developing countries finance their external deficits EXCEPT

One should expect ________ relationship between annual per-capita GDP and an inverse index of corruption.

Please consider Table 22-2 below. Assuming constant Annual Average Growth Rate in the future, determine the year in which the United States will have the same output per capita as South Korea?

Explain why East Asian countries have done so well relative to South American countries.

Why may equity finance be preferred to debt finance for developing countries?

List and explain 3 major channels through which developing countries have financed their external deficits.

In general, one would expect that life expectancies reflect international differences in income levels. Do the data support such a claim?

What are the main lessons economists learned from the developing country crisis?

Compare the macroeconomic performances in the 1990s of the following countries under the following exchange-rate regimes: floating exchange rates, Mexico and Brazil; capital control, China and Malaysia; and currency boards, Estonia and Hong Kong; dollarization, Argentina.

The main factors that discourage investment in capital and skills in developing countries are

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

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