Question 1

Over the period 1960-2000, France grew relative to the United States economy

Accepted Answer

A)  more. 
B)  less. 
C)  the same. 
D)  The French economy grew by one percent. 
E)  The French economy grew by 2 percent. 
A)  more. 
B)  less. 
C)  the same. 
D)  The French economy grew by one percent. 
E)  The French economy grew by 2 percent. A

Question 2

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 D

Question 3

The world's economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle-income and high-income economies. What category would Israel falls under?

Accepted Answer

A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Israel falls between low income and lower middle-income economies. 
A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Israel falls between low income and lower middle-income economies. C

Question 4

Which of the following are characteristic of a developing country?

Accepted Answer

A)  extensive embrace of free trade policies 
B)  low inflation 
C)  high national savings 
D)  a current account deficit and low national savings 
E)  strong credit institutions 
A)  extensive embrace of free trade policies 
B)  low inflation 
C)  high national savings 
D)  a current account deficit and low national savings 
E)  strong credit institutions

Question 5

Over the post-war era, poorer countries grew

Accepted Answer

A)  faster. 
B)  slower. 
C)  stayed the same. 
D)  grew faster, then grew slower. 
E)  No general tendency can be found. 
A)  faster. 
B)  slower. 
C)  stayed the same. 
D)  grew faster, then grew slower. 
E)  No general tendency can be found.

Question 6

"Trade liberalization should precede capital account liberalization." Discuss.

Accepted Answer

The answer is probably true. T

Question 7

The world's economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle-income and high-income economies. What category would Singapore falls under?

Accepted Answer

A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Singapore falls between low income and lower middle-income economies. 
A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Singapore falls between low income and lower middle-income economies.

Question 8

Over the post-war era, the gaps between industrial countries' living standards

Accepted Answer

A)  disappeared. 
B)  stayed the same. 
C)  increased. 
D)  decreased. 
E)  fluctuated. 
A)  disappeared. 
B)  stayed the same. 
C)  increased. 
D)  decreased. 
E)  fluctuated.

Question 9

Which of the following does not explain why developing countries encouraged new manufacturing industries of their own in the mid 20th century?

Accepted Answer

A)  They were cut off from traditional suppliers of manufactures during WWII. 
B)  Former colonial areas had something to prove; they wanted to attain the same income levels as their former rulers. 
C)  Leaders of these countries feared that their efforts to escape poverty would be doomed if they continues to specialize in primary commodity exports. 
D)  There was political pressure to protect these industries. 
E)  Developing countries ran out of the natural resources that traditionally made up the majority of their trade. 
A)  They were cut off from traditional suppliers of manufactures during WWII. 
B)  Former colonial areas had something to prove; they wanted to attain the same income levels as their former rulers. 
C)  Leaders of these countries feared that their efforts to escape poverty would be doomed if they continues to specialize in primary commodity exports. 
D)  There was political pressure to protect these industries. 
E)  Developing countries ran out of the natural resources that traditionally made up the majority of their trade.

Question 10

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 11

A currency board can ________ a country's ability to act as a lender of last resort.

Accepted Answer

A)  aggrandize 
B)  limit 
C)  enhance 
D)  offset 
E)  not affect 
A)  aggrandize 
B)  limit 
C)  enhance 
D)  offset 
E)  not affect

Question 12

Explain the extensive economic role of government within a developing country.

Accepted Answer

An open question. Students should includ

Question 13

The $50 billion emergency loan orchestrated by the U.S. Treasury and the IMF to Mexico in 1994

Accepted Answer

A)  was a disastrous policy for Mexico. 
B)  avoided a disaster to the Mexican economy. 
C)  did not affect Mexico in the short run. 
D)  did not affect Mexico in the long run. 
E)  was ineffective both in the short and long runs. 
A)  was a disastrous policy for Mexico. 
B)  avoided a disaster to the Mexican economy. 
C)  did not affect Mexico in the short run. 
D)  did not affect Mexico in the long run. 
E)  was ineffective both in the short and long runs.

Question 14

What does it mean for a loan to be in default?

Accepted Answer

A)  when the borrower of the a loan fails to repay on schedule according to a loan contract, without the agreement of the lender 
B)  when the borrower of a loan fails to repay on schedule according to a loan contract, with the agreement of the lender 
C)  when the lender of a loan fails to supplies the full amount of a loan to the borrower 
D)  when the lender of a loan supplies the full amount of a loan to a borrower without any promise of being repaid 
E)  when the lender of a loan fails to offer the promised sum 
A)  when the borrower of the a loan fails to repay on schedule according to a loan contract, without the agreement of the lender 
B)  when the borrower of a loan fails to repay on schedule according to a loan contract, with the agreement of the lender 
C)  when the lender of a loan fails to supplies the full amount of a loan to the borrower 
D)  when the lender of a loan supplies the full amount of a loan to a borrower without any promise of being repaid 
E)  when the lender of a loan fails to offer the promised sum

Question 15

In general, the development of underground economic activity ________ economic efficiency

Accepted Answer

A)  hinders 
B)  has no effect 
C)  aides 
D)  hard to tell, sometime hinders, sometimes aides 
E)  spikes 
A)  hinders 
B)  has no effect 
C)  aides 
D)  hard to tell, sometime hinders, sometimes aides 
E)  spikes

Question 16

Explain why despite enormous natural resources, much of Latin America's population remains in poverty and the region has been repeatedly experiencing financial crises.

Accepted Answer

Most Latin America population remains in

Question 17

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

Accepted Answer

(1) Choosing the right exchang

Question 18

Based on the 1997 Crisis and your own experience, what are the main weaknesses of the East Asian economies?

Accepted Answer

The textbook raised mainly three issues.

Question 19

Some economists claim that the Chilean experience during the 1990s was much more successful than its Latin American neighbors. Evaluate the Chilean policies during that decade.

Accepted Answer

Students should refer to the d

Question 20

What factors lie behind capital inflows to the developing world?

Accepted Answer

Many developing countries have received

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

Over the period 1960-2000, France grew relative to the United States economy

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

The world's economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle-income and high-income economies. What category would Israel falls under?

Which of the following are characteristic of a developing country?

Over the post-war era, poorer countries grew

"Trade liberalization should precede capital account liberalization." Discuss.

The world's economies can be divided into four main categories according to their annual per-capita income levels: low-income, lower middle-income, upper middle-income and high-income economies. What category would Singapore falls under?

Over the post-war era, the gaps between industrial countries' living standards

Which of the following does not explain why developing countries encouraged new manufacturing industries of their own in the mid 20th century?

There are many ways developing countries finance their external deficits except

A currency board can ________ a country's ability to act as a lender of last resort.

Explain the extensive economic role of government within a developing country.

The $50 billion emergency loan orchestrated by the U.S. Treasury and the IMF to Mexico in 1994

What does it mean for a loan to be in default?

In general, the development of underground economic activity ________ economic efficiency

Explain why despite enormous natural resources, much of Latin America's population remains in poverty and the region has been repeatedly experiencing financial crises.

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

Based on the 1997 Crisis and your own experience, what are the main weaknesses of the East Asian economies?

Some economists claim that the Chilean experience during the 1990s was much more successful than its Latin American neighbors. Evaluate the Chilean policies during that decade.

What factors lie behind capital inflows to the developing world?

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

Optimum Currency Areas and the European Experience

Financial Globalization: Opportunity and Crisis

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