Exam 7: Trade Policies for the Developing Nations

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

Import substitution is an example of

Outward-oriented growth strategies emphasize

According to the Generalized System of Preferences of the United States, exports from developing countries face higher import tariff rates than exports from industrialized countries.

Figure 7.3. World Oil Market -Consider Figure 7.3.Under a profit-maximizing cartel, the quantity of oil produced equals

Efforts to stabilize export prices and revenues include all of the following EXCEPT

To prevent the market price of tin from rising above the target price, the manager of a buffer stock will purchase excess supplies of tin from the market.

Figure 7.3. World Oil Market -Consider Figure 7.3.Under competitive conditions, producer profits total

Export promotion policies attempt to encourage production of goods for sale overseas, which fosters additional export revenues; import substitution policies attempt to replace imported goods with domestic production.

By the 1990s, China had departed from a capitalistic economy and shifted to a Soviet-type economy encompassing small-scale, labor-intensive industry.

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.

What are some major trade problems faced by developing nations?

If the demand for coffee is price inelastic, an increase in the supply of coffee leads to falling prices and rising sales revenues.

Import substitution policies have been highly successful in fostering employment in new, emerging industries because these policies prevent the import of foreign capital goods.

Along the "ladder of economic development," Canada and Germany would be located along the higher steps, while Ecuador and Venezuela would be located along the lower steps.

The mission of the ______ is to give loans to developing countries to build schools, hospitals, roads, and bridges in order to reduce poverty and stimulate economic development.

Under the Generalized System of Preferences program, the major industrial countries agree to temporarily reduce tariffs on designated imports from other industrial countries.

The Fair Trade Movement attempts to help poor coffee growers in developing countries by providing them higher prices for their coffee beans.

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 in order to increase profits.

Developing countries often argue that their