Question 1

During the late 1980s and early 1990s,China dismantled much of its centrally-planned economy and permitted free enterprise to replace it.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

Export-led growth tends to:

Accepted Answer

A)  Exploit domestic comparative advantages 
B)  Discourage competition in the global economy 
C)  Lead to unemployment among domestic workers 
D)  Help firms benefit from diseconomies of large-scale production

Question 4

Import substitution policies make use of:

Accepted Answer

A)  Tariffs that discourage goods from entering a country 
B)  Quotas applied to goods that are shipped abroad 
C)  Production subsidies granted to industries with comparative advantages 
D)  Tax breaks granted to industries with comparative advantages

Question 5

The developing nations are most of those in Africa,Asia,North America,and Western Europe.

Accepted Answer

A) True 
 B)False

Question 6

Import-substitution policies are supported by the fact that many developing countries have small domestic markets and thus their producers enjoy the benefits of diseconomies of small-scale production.

Accepted Answer

A) True 
 B)False

Question 7

When cartel members agree to restrict output to increase the price of their product,a single member of the cartel has an economic incentive to violate the agreement by increasing its output so as to increase profits.

Accepted Answer

A) True 
 B)False

Question 8

Among the economic problems facing developing countries have been low dependence on primary-product exports,unstable export markets,and worsening terms of trade.

Accepted Answer

A) True 
 B)False

Question 9

To help developing nations strengthen their international competitiveness,many industrial nations have granted nonreciprocal 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

Question 10

The United Nation Conference on Trade and Development in 1964 was successful in convincing developing countries to switch from export-led industrialization to import-substitution industrialization.

Accepted Answer

A) True 
 B)False

Question 11

For developing countries,a key factor underlying the instability of primary-product prices and export receipts is the high price elasticity of demand for products such as tin and copper.

Accepted Answer

A) True 
 B)False

Question 12

One factor that has prevented the formation of cartels for producers of commodities is that:

Accepted Answer

A)  The demand for commodities tends to be price inelastic 
B)  Substitute products exist for many commodities 
C)  Commodity produces have been able to dominate world markets 
D)  Production of most commodities is capital intensive

Question 13

Concerning the hypothesis that there has occurred a long-run deterioration in the developing countries' terms of trade,empirical studies provide:

Accepted Answer

A)  Mixed evidence that does not substantiate the deterioration hypothesis 
B)  Overwhelming support for the deterioration hypothesis 
C)  Overwhelming opposition to the deterioration hypothesis 
D)  None of the above

Question 14

Which of the following situations reduces the likelihood of successful operation of a cartel?

Accepted Answer

A)  Cartel sales experience a rapid expansion 
B)  The demand for cartel output is price inelastic 
C)  The number of firms in the cartel is large 
D)  It is very difficult for new firms to enter the market

Question 15

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 scheme is referred to as:

Accepted Answer

A)  Generalized system of preferences 
B)  Export-led growth 
C)  International commodity agreement 
D)  Reciprocal trade agreement

Question 16

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

Accepted Answer

A)  Multilateral contract 
B)  Buffer stock 
C)  Export promotion 
D)  Export quota

Question 17

Rather than conduct massive stabilization operations,buffer stock officials will periodically revise target prices should they move out of line with long-term price trends.

Accepted Answer

A) True 
 B)False

Question 18

Export-led growth industrialization suffers a major problem: it depends on the willingness and ability of foreign nations to absorb the goods exported by the country pursuing such a policy.

Accepted Answer

A) True 
 B)False

Question 19

Concerning the price elasticities of supply and demand for commodities,empirical estimates suggest that most commodities have:

Accepted Answer

A)  Inelastic supply schedules and inelastic demand schedules 
B)  Inelastic supply schedules and elastic demand schedules 
C)  Elastic supply schedules and inelastic demand schedules 
D)  Elastic supply schedules and elastic demand schedules

Question 20

Assuming identical cost and demand curves,OPEC as a cartel will,in comparison to a competitive industry:

Accepted Answer

A)  Produce greater output and charge a lower price 
B)  Produce greater output and charge a higher price 
C)  Produce less output and charge a higher price 
D)  Produce less output and charge a lower price

Exam 7: Trade Policies for the Developing Nations

During the late 1980s and early 1990s,China dismantled much of its centrally-planned economy and permitted free enterprise to replace it.

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

Export-led growth tends to:

Import substitution policies make use of:

The developing nations are most of those in Africa,Asia,North America,and Western Europe.

Import-substitution policies are supported by the fact that many developing countries have small domestic markets and thus their producers enjoy the benefits of diseconomies of small-scale production.

When cartel members agree to restrict output to increase the price of their product,a single member of the cartel has an economic incentive to violate the agreement by increasing its output so as to increase profits.

Among the economic problems facing developing countries have been low dependence on primary-product exports,unstable export markets,and worsening terms of trade.

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

The United Nation Conference on Trade and Development in 1964 was successful in convincing developing countries to switch from export-led industrialization to import-substitution industrialization.

For developing countries,a key factor underlying the instability of primary-product prices and export receipts is the high price elasticity of demand for products such as tin and copper.

One factor that has prevented the formation of cartels for producers of commodities is that:

Concerning the hypothesis that there has occurred a long-run deterioration in the developing countries' terms of trade,empirical studies provide:

Which of the following situations reduces the likelihood of successful operation of a cartel?

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 scheme is referred to as:

Which trade strategy have developing countries used to replace commodity exports with exports such as processed primary products,semi-manufacturers,and manufacturers?

Rather than conduct massive stabilization operations,buffer stock officials will periodically revise target prices should they move out of line with long-term price trends.

Export-led growth industrialization suffers a major problem: it depends on the willingness and ability of foreign nations to absorb the goods exported by the country pursuing such a policy.

Concerning the price elasticities of supply and demand for commodities,empirical estimates suggest that most commodities have:

Assuming identical cost and demand curves,OPEC as a cartel will,in comparison to a competitive industry: