Question 1

Sophisticated theoretical arguments supporting import-substitution policies include

Accepted Answer

A)  terms of trade effects. 
B)  scale economy arguments. 
C)  learning curve considerations. 
D)  the problem of appropriability. 
E)  domestic market failure arguments. 
A)  terms of trade effects. 
B)  scale economy arguments. 
C)  learning curve considerations. 
D)  the problem of appropriability. 
E)  domestic market failure arguments.

Question 2

To help developing nations strengthen their international competitiveness, many industrial nations have granted tariff reductions to developing nations under the

Accepted Answer

A)  international commodity agreements program. 
B)  multilateral contract program. 
C)  generalized system of preferences program. 
D)  export led growth program. 
E)  import substitution policy. 
A)  international commodity agreements program. 
B)  multilateral contract program. 
C)  generalized system of preferences program. 
D)  export led growth program. 
E)  import substitution policy.

Question 3

The disappointment with import-substitution policies is in part because

Accepted Answer

A)  of the rapid and continuous growth record of South American countries. 
B)  many countries pursuing this strategy experienced stagnation in their growth. 
C)  this policy is inconsistent with sophisticated economic growth models. 
D)  this policy tended to create world-class industrial competitors. 
E)  of the financial investment lost by the U.S. 
A)  of the rapid and continuous growth record of South American countries. 
B)  many countries pursuing this strategy experienced stagnation in their growth. 
C)  this policy is inconsistent with sophisticated economic growth models. 
D)  this policy tended to create world-class industrial competitors. 
E)  of the financial investment lost by the U.S.

Question 4

The HPAE "economic miracle" illustrates a clear case in which

Accepted Answer

A)  exports and growth were positively related. 
B)  exports were promoted by successful economic growth. 
C)  economic growth was determined by successful export promotion. 
D)  trade policy dominated other considerations in promoting economic growth. 
E)  import substitution enhanced economic development. 
A)  exports and growth were positively related. 
B)  exports were promoted by successful economic growth. 
C)  economic growth was determined by successful export promotion. 
D)  trade policy dominated other considerations in promoting economic growth. 
E)  import substitution enhanced economic development.

Question 5

The infant industry argument is that

Accepted Answer

A)  comparative advantage is irrelevant to economic growth. 
B)  developing countries have a comparative advantage in agricultural goods. 
C)  developing countries have a comparative advantage in manufacturing. 
D)  developing countries have a potential comparative advantage in manufacturing. 
E)  developing countries have no chance to compete with industrialized countries. 
A)  comparative advantage is irrelevant to economic growth. 
B)  developing countries have a comparative advantage in agricultural goods. 
C)  developing countries have a comparative advantage in manufacturing. 
D)  developing countries have a potential comparative advantage in manufacturing. 
E)  developing countries have no chance to compete with industrialized countries.

Question 6

-Refer to above figure. If OmL1 workers are employed in manufacturing then what is the marginal productivity of labor in manufacturing?

Accepted Answer

The answer of  
-Refer to above figure. If OmL1...

Question 7

The imperfect capital market justification for infant industry promotion

Accepted Answer

A)  assumes that new industries will tend to have low profits. 
B)  assumes that infant industries will soon mature. 
C)  assumes that infant industries will be in products of comparative advantage. 
D)  assumes that banks can allocate resources efficiently. 
E)  assumes that developing country will reward the donor country. 
A)  assumes that new industries will tend to have low profits. 
B)  assumes that infant industries will soon mature. 
C)  assumes that infant industries will be in products of comparative advantage. 
D)  assumes that banks can allocate resources efficiently. 
E)  assumes that developing country will reward the donor country.

Question 8

The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that

Accepted Answer

A)  high rates of protection tend to harm economic growth. 
B)  the poorer is the country the easier it is for it to "catch up" economically. 
C)  low rates of protection tend to promote economic growth. 
D)  free trade always best stimulates a developing country's economy. 
E)  neither trade liberalization nor import substitution is a foolproof strategy for economic development. 
A)  high rates of protection tend to harm economic growth. 
B)  the poorer is the country the easier it is for it to "catch up" economically. 
C)  low rates of protection tend to promote economic growth. 
D)  free trade always best stimulates a developing country's economy. 
E)  neither trade liberalization nor import substitution is a foolproof strategy for economic development.

Question 9

-Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing, what trade policy might gain ABC of economic welfare?

Accepted Answer

Import-substitution

Question 10

-Refer to above figure. Why would workers not shift from agriculture to manufacturing in the initial situation where wages are higher in the latter?

Accepted Answer

Imperfecti

Question 11

-Refer to above figure. If manufacturing labor were to increase to OmL2, how much value would the economy as a whole gain?

Accepted Answer

The answer of  
-Refer to above figure. If manufacturing...

Question 12

To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called

Accepted Answer

A)  export-led growth. 
B)  generalized system of preferences. 
C)  Most Favored Nation. 
D)  reciprocal trade agreement. 
E)  outsourcing. 
A)  export-led growth. 
B)  generalized system of preferences. 
C)  Most Favored Nation. 
D)  reciprocal trade agreement. 
E)  outsourcing.

Question 13

Which of the following could explain why the terms of trade of developing countries might deteriorate over time?

Accepted Answer

A)  Developing country exports consist mainly of manufactured goods. 
B)  Developing country exports consist mainly of primary products. 
C)  Commodity export prices are determined in highly competitive markets. 
D)  Commodity export prices are solely determined by developing countries. 
E)  Developing country exports are too diverse. 
A)  Developing country exports consist mainly of manufactured goods. 
B)  Developing country exports consist mainly of primary products. 
C)  Commodity export prices are determined in highly competitive markets. 
D)  Commodity export prices are solely determined by developing countries. 
E)  Developing country exports are too diverse.

Question 14

The infant industry argument was an important theoretical basis for

Accepted Answer

A)  neo-colonialist theory of international exploitation. 
B)  import-substituting industrialization. 
C)  historiography of the industrial revolution in Western Europe. 
D)  the East-Asian miracle. 
E)  the reduction of tariffs on Western Europe. 
A)  neo-colonialist theory of international exploitation. 
B)  import-substituting industrialization. 
C)  historiography of the industrial revolution in Western Europe. 
D)  the East-Asian miracle. 
E)  the reduction of tariffs on Western Europe.

Question 15

The relatively rapid economic growth experienced by Chile in the late 1980s

Accepted Answer

A)  supported the conventional Latin American reliance on import substitution. 
B)  relied on the Harris-Todaro model to explain this growth. 
C)  rejected the conventional Latin American reliance on import substitution. 
D)  demonstrated the importance of market failure as a reason for import substitution. 
E)  relied on high tariffs and import substitution. 
A)  supported the conventional Latin American reliance on import substitution. 
B)  relied on the Harris-Todaro model to explain this growth. 
C)  rejected the conventional Latin American reliance on import substitution. 
D)  demonstrated the importance of market failure as a reason for import substitution. 
E)  relied on high tariffs and import substitution.

Question 16

The consensus today is that import-substitution protectionist industrial policy has not served the developing countries' growth ambitions well. This fact proves that policies relying on export-driven growth are the "winning ticket" for these countries.

Accepted Answer

Although there are many who draw precise

Question 17

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

Accepted Answer

A)  xport promotion 
B)  import substitution 
C)  international commodity agreements 
D)  Infant Industry promotion 
E)  intra-industry trade practice 
A)  xport promotion 
B)  import substitution 
C)  international commodity agreements 
D)  Infant Industry promotion 
E)  intra-industry trade practice

Question 18

The remarkable success of the HPAEs proves that

Accepted Answer

A)  trade policy is the key to successful economic growth. 
B)  trade policy is irrelevant to successful economic growth. 
C)  high educational standards is the key to successful economic growth. 
D)  dual economies must suffer economic stagnation. 
E)  trade policy can lead to a higher standard of living for developing countries. 
A)  trade policy is the key to successful economic growth. 
B)  trade policy is irrelevant to successful economic growth. 
C)  high educational standards is the key to successful economic growth. 
D)  dual economies must suffer economic stagnation. 
E)  trade policy can lead to a higher standard of living for developing countries.

Question 19

All the following nations except ________ have recently utilized export-led growth policies.

Accepted Answer

A)  Hong Kong 
B)  South Korea 
C)  Argentina 
D)  Singapore 
E)  Taiwan 
A)  Hong Kong 
B)  South Korea 
C)  Argentina 
D)  Singapore 
E)  Taiwan

Question 20

The high correlation between rapid growth in exports and rapid economic growth observed in several East Asia countries in recent decades

Accepted Answer

A)  proves that export promoting trade policy leads to relatively rapid economic growth. 
B)  proves that a free-trade orientation of trade policy results in rapid economic growth. 
C)  proves that exports help growth, whereas imports impede growth. 
D)  proves that trade policy is the most important policy area for promotion of economic development. 
E)  does not prove that trade liberalization always leads to rapid economic growth. 
A)  proves that export promoting trade policy leads to relatively rapid economic growth. 
B)  proves that a free-trade orientation of trade policy results in rapid economic growth. 
C)  proves that exports help growth, whereas imports impede growth. 
D)  proves that trade policy is the most important policy area for promotion of economic development. 
E)  does not prove that trade liberalization always leads to rapid economic growth.

Exam 11: Trade Policy in Developing Countries

Sophisticated theoretical arguments supporting import-substitution policies include

To help developing nations strengthen their international competitiveness, many industrial nations have granted tariff reductions to developing nations under the

The disappointment with import-substitution policies is in part because

The HPAE "economic miracle" illustrates a clear case in which

The infant industry argument is that

-Refer to above figure. If OmL1 workers are employed in manufacturing then what is the marginal productivity of labor in manufacturing?

The imperfect capital market justification for infant industry promotion

The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that

-Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing, what trade policy might gain ABC of economic welfare?

-Refer to above figure. Why would workers not shift from agriculture to manufacturing in the initial situation where wages are higher in the latter?

-Refer to above figure. If manufacturing labor were to increase to OmL2, how much value would the economy as a whole gain?

To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called

Which of the following could explain why the terms of trade of developing countries might deteriorate over time?

The infant industry argument was an important theoretical basis for

The relatively rapid economic growth experienced by Chile in the late 1980s

The consensus today is that import-substitution protectionist industrial policy has not served the developing countries' growth ambitions well. This fact proves that policies relying on export-driven growth are the "winning ticket" for these countries.

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

The remarkable success of the HPAEs proves that

All the following nations except ________ have recently utilized export-led growth policies.

The high correlation between rapid growth in exports and rapid economic growth observed in several East Asia countries in recent decades

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

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

Developing Countries: Growth, Crisis, and Reform

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