Question 1

The development of countries like South Korea has been supported by all of the following EXCEPT

Accepted Answer

A)  high domestic interest rates. 
B)  high domestic saving rates. 
C)  large endowments of human capital. 
D)  high levels of labor productivity. 
E)  reduced government regulation. 
A)  high domestic interest rates. 
B)  high domestic saving rates. 
C)  large endowments of human capital. 
D)  high levels of labor productivity. 
E)  reduced government regulation. A

Question 2

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. D

Question 3

All of 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 C

Question 4

The HPAE (High Performance Asian Economies) countries

Accepted Answer

A)  have all consistently supported free trade policies. 
B)  have all consistently maintained import-substitution policies. 
C)  have all consistently maintained non-biased efficient free capital markets. 
D)  have all maintained openness to international trade. 
E)  have all outperformed the U.S. 
A)  have all consistently supported free trade policies. 
B)  have all consistently maintained import-substitution policies. 
C)  have all consistently maintained non-biased efficient free capital markets. 
D)  have all maintained openness to international trade. 
E)  have all outperformed the U.S.

Question 5

Statistical evidence suggests that

Accepted Answer

A)  free trade policies promote economic growth more effectively than do import substitution policies. 
B)  import substituting policies tend to promote effective exploitation of scale economies. 
C)  import substitution tends to lead to relatively low effective rates of protection. 
D)  import substitution is to this day the preferred growth strategy promoted by the World Bank. 
E)  import substitution proved to be the most effective aid for developing countries before 1970. 
A)  free trade policies promote economic growth more effectively than do import substitution policies. 
B)  import substituting policies tend to promote effective exploitation of scale economies. 
C)  import substitution tends to lead to relatively low effective rates of protection. 
D)  import substitution is to this day the preferred growth strategy promoted by the World Bank. 
E)  import substitution proved to be the most effective aid for developing countries before 1970.

Question 6

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 7

Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers?

Accepted Answer

A)  international commodity agreement 
B)  export promotion 
C)  multilateral contract 
D)  import substitution 
E)  export subsidies 
A)  international commodity agreement 
B)  export promotion 
C)  multilateral contract 
D)  import substitution 
E)  export subsidies

Question 8

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 9

-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 10

The "East Asian Miracle" of the "Four Tigers" in the 1960s was replicated by

Accepted Answer

A)  developing countries around the world. 
B)  other East Asian countries. 
C)  Sub Sahara African countries. 
D)  Industrialized countries. 
E)  Eastern European countries. 
A)  developing countries around the world. 
B)  other East Asian countries. 
C)  Sub Sahara African countries. 
D)  Industrialized countries. 
E)  Eastern European countries.

Question 11

The infant industry argument calls for active government involvement

Accepted Answer

A)  only if the government forecasts are accurate. 
B)  only if some market failure can be identified. 
C)  only if the industry is not one already dominated by industrial countries. 
D)  only if the industry has a high value added. 
E)  only if the industry is independently able to earn high returns. 
A)  only if the government forecasts are accurate. 
B)  only if some market failure can be identified. 
C)  only if the industry is not one already dominated by industrial countries. 
D)  only if the industry has a high value added. 
E)  only if the industry is independently able to earn high returns.

Question 12

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 13

Growth rates in Brazil and other Latin American countries have actually been slower since the trade liberalization of the late 1980s than they were during import-substituting industrialization

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.

Question 14

General equilibrium considerations lead to the realization that import-substituting policies have the effect of

Accepted Answer

A)  discouraging exports. 
B)  encouraging exports. 
C)  encouraging an efficient use of a country's resources. 
D)  generating large tariff revenues for the government. 
E)  creating competitive manufacturing sectors. 
A)  discouraging exports. 
B)  encouraging exports. 
C)  encouraging an efficient use of a country's resources. 
D)  generating large tariff revenues for the government. 
E)  creating competitive manufacturing sectors.

Question 15

The United States, as it began its long and successful growth in the early 19th century, consciously promoted domestic production through such activities as tariffs, Clay's American System, and many direct subsidies to railroads, canal companies, farmers (free land) etc. Today we view this blatant example of large scale and extensive import-substitution industrialization as having been very successful. Comment on this.

Accepted Answer

This is an interesting point and emphasi

Question 16

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

Accepted Answer

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

Question 17

The growth successes of the high performance Asian economies

Accepted Answer

A)  supports the belief that economic development requires import substitution policies. 
B)  rejects the belief that export-oriented industrialization is likely to promote economic development. 
C)  rejects the belief that economic development requires import substitution policies. 
D)  suggests that free trade policies are required for successful economic development. 
E)  enforces United States' hesitation to trade with developing countries. 
A)  supports the belief that economic development requires import substitution policies. 
B)  rejects the belief that export-oriented industrialization is likely to promote economic development. 
C)  rejects the belief that economic development requires import substitution policies. 
D)  suggests that free trade policies are required for successful economic development. 
E)  enforces United States' hesitation to trade with developing countries.

Question 18

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 19

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

Accepted Answer

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

Question 20

Taiwan and South Korea are examples of developing nations that have recently pursued these industrialization policies:

Accepted Answer

A)  import substitution. 
B)  export promotion. 
C)  commercial dumping. 
D)  multilateral contract. 
E)  trade embargoes. 
A)  import substitution. 
B)  export promotion. 
C)  commercial dumping. 
D)  multilateral contract. 
E)  trade embargoes.

Exam 11: Trade Policy in Developing Countries

The development of countries like South Korea has been supported by all of the following EXCEPT

The infant industry argument is that

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

The HPAE (High Performance Asian Economies) countries

Statistical evidence suggests that

The disappointment with import-substitution policies is in part because

Which trade strategy have developing countries used to restrict imports of manufactured goods so that the domestic market is preserved for home producers?

The infant industry argument was an important theoretical basis for

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

The "East Asian Miracle" of the "Four Tigers" in the 1960s was replicated by

The infant industry argument calls for active government involvement

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

Growth rates in Brazil and other Latin American countries have actually been slower since the trade liberalization of the late 1980s than they were during import-substituting industrialization

General equilibrium considerations lead to the realization that import-substituting policies have the effect of

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

The growth successes of the high performance Asian economies

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?

Taiwan and South Korea are examples of developing nations that have recently pursued these industrialization policies:

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

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

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