Question 1

In general, one expects that life expectancy 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 2

"Developing countries should delay opening the capital account until the domestic financial system is strong enough to withstand the sometimes violent ebb and flow of world capital." Discuss.

Accepted Answer

Probably true. The issue is re

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 sub-Saharan Africa fall under?

Accepted Answer

A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Sub-Saharan Africa falls between lower-middle and upper-middle. 
A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Sub-Saharan Africa falls between lower-middle and upper-middle.

Question 4

During 1991, Argentina's monetary law had a currency board. Explain and give an example.

Accepted Answer

The currency board is monetary base back

Question 5

Explain the theory behind convergence and why it is a "deceptively simple" theory.

Accepted Answer

Convergence is the tendency for gaps bet

Question 6

How would you define convergence?

Accepted Answer

A)  tendency for gaps between industrial countries' per-capital incomes to narrow 
B)  tendency for gaps between all countries' per-capital incomes to narrow 
C)  the theory that a crisis in a low-income country will spread to all countries, regardless of debt structure 
D)  the theory that a crisis in a low-income country will spread to only those countries which had lent money to the original country 
E)  tendency for the world distribution of income to be persistently unequal 
A)  tendency for gaps between industrial countries' per-capital incomes to narrow 
B)  tendency for gaps between all countries' per-capital incomes to narrow 
C)  the theory that a crisis in a low-income country will spread to all countries, regardless of debt structure 
D)  the theory that a crisis in a low-income country will spread to only those countries which had lent money to the original country 
E)  tendency for the world distribution of income to be persistently unequal

Question 7

What are the three main lessons on crisis learned from early developing countries in Latin America?

Accepted Answer

A)  choosing the right exchange rate regime, the importance of contagion and the importance of the banking system 
B)  choosing the right real rate, the importance of following exchange rates, and keeping prices high to make the most profit 
C)  pegging exchange rates with Euros, keeping labor cost and wages low 
D)  maintaining money supply, avoiding tariffs, and increasing output 
E)  maintaining money supply, avoiding inflation, and increasing production 
A)  choosing the right exchange rate regime, the importance of contagion and the importance of the banking system 
B)  choosing the right real rate, the importance of following exchange rates, and keeping prices high to make the most profit 
C)  pegging exchange rates with Euros, keeping labor cost and wages low 
D)  maintaining money supply, avoiding tariffs, and increasing output 
E)  maintaining money supply, avoiding inflation, and increasing production

Question 8

The real resource a government earns when it prints money and spends it on goods and services is called:

Accepted Answer

A)  seigniorage. 
B)  control of capital movements by limiting foreign exchange transactions. 
C)  pure profits. 
D)  inflation profits. 
E)  greenback. 
A)  seigniorage. 
B)  control of capital movements by limiting foreign exchange transactions. 
C)  pure profits. 
D)  inflation profits. 
E)  greenback.

Question 9

With which country did the Debt Crisis of the early 1980s begin?

Accepted Answer

A)  France 
B)  Mexico 
C)  Argentina 
D)  Japan 
E)  Germany 
A)  France 
B)  Mexico 
C)  Argentina 
D)  Japan 
E)  Germany

Question 10

Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of trade change?

Accepted Answer

When a country's liabilities are in the

Question 11

Explain the reasons for the economic "miracle" of the East Asian countries between 1960 and 1997. Is it only because of the common Asian practice of industrial policy and business-government cooperation?

Accepted Answer

Students should emphasize high

Question 12

Over the post-war era, the tendency for gaps between all countries' living standards

Accepted Answer

A)  disappeared. 
B)  stayed the same. 
C)  increased. 
D)  decreased. 
E)  Hard to tell from the data. 
A)  disappeared. 
B)  stayed the same. 
C)  increased. 
D)  decreased. 
E)  Hard to tell from the data.

Question 13

East Asia's crisis was relatively long lived because

Accepted Answer

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

Question 14

Evaluate the Argentinean Convertibility Law of April, 1991.

Accepted Answer

Good idea in the short run, ca

Question 15

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 the smaller Latin American and Caribbean countries fall under?

Accepted Answer

A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Smaller Latin American and Caribbean countries fall between low income and lower middle-income economies. 
A)  low-income 
B)  upper middle-income 
C)  high-income 
D)  lower middle-income 
E)  Smaller Latin American and Caribbean countries fall between low income and lower middle-income economies.

Question 16

For many developing countries, natural resources or agricultural commodities make up a ________ share of exports

Accepted Answer

A)  large 
B)  moderate 
C)  nonexistent 
D)  small 
E)  insubstantial 
A)  large 
B)  moderate 
C)  nonexistent 
D)  small 
E)  insubstantial

Question 17

Which of the following countries is the most corrupt?

Accepted Answer

A)  U.S. 
B)  Iceland 
C)  Finland 
D)  New Zealand 
E)  Greenland 
A)  U.S. 
B)  Iceland 
C)  Finland 
D)  New Zealand 
E)  Greenland

Question 18

Contrast the crisis in Poland and Russia. Explain why the Polish economy has done better?

Accepted Answer

By the end of the 1990s, a handful of Ea

Question 19

Which of the following economic lessons should we take from developing country crises in Latin America (and elsewhere)?

Accepted Answer

A)  Only that it is important to choose the right exchange rate regime. 
B)  Only that banking is of central importance in any government. 
C)  The order in which reform measures are implemented are irrelevant. 
D)  It is important to choose the right exchange rate regime and banking is of central importance in any government. 
E)  The order in which reform measures are implemented are irrelevant and banking is of central importance in any government. 
A)  Only that it is important to choose the right exchange rate regime. 
B)  Only that banking is of central importance in any government. 
C)  The order in which reform measures are implemented are irrelevant. 
D)  It is important to choose the right exchange rate regime and banking is of central importance in any government. 
E)  The order in which reform measures are implemented are irrelevant and banking is of central importance in any government.

Question 20

How would you describe the world distribution of income?

Accepted Answer

A)  persistently unequal 
B)  temporarily unequal 
C)  converging 
D)  fairly equal 
E)  completely unpredictable 
A)  persistently unequal 
B)  temporarily unequal 
C)  converging 
D)  fairly equal 
E)  completely unpredictable

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

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

"Developing countries should delay opening the capital account until the domestic financial system is strong enough to withstand the sometimes violent ebb and flow of world capital." 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 sub-Saharan Africa fall under?

During 1991, Argentina's monetary law had a currency board. Explain and give an example.

Explain the theory behind convergence and why it is a "deceptively simple" theory.

How would you define convergence?

What are the three main lessons on crisis learned from early developing countries in Latin America?

The real resource a government earns when it prints money and spends it on goods and services is called:

With which country did the Debt Crisis of the early 1980s begin?

Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of trade change?

Explain the reasons for the economic "miracle" of the East Asian countries between 1960 and 1997. Is it only because of the common Asian practice of industrial policy and business-government cooperation?

Over the post-war era, the tendency for gaps between all countries' living standards

East Asia's crisis was relatively long lived because

Evaluate the Argentinean Convertibility Law of April, 1991.

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 the smaller Latin American and Caribbean countries fall under?

For many developing countries, natural resources or agricultural commodities make up a ________ share of exports

Which of the following countries is the most corrupt?

Contrast the crisis in Poland and Russia. Explain why the Polish economy has done better?

Which of the following economic lessons should we take from developing country crises in Latin America (and elsewhere)?

How would you describe the world distribution of income?

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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