Exam 7: Trade Policies for the Developing Nations

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.

Among the benefits that a regional trading arrangement can provide are all of these EXCEPT:

A key factor underlying the instability of primary product prices and export receipts of developing nations is the

A free-trade area is an association of trading countries whose members agree to remove all trade restrictions among themselves,while each member country imposes identical trade restrictions against nonmember countries.

Critics of the North American Free Trade Agreement (NAFTA) feared that many Americans would migrate to Mexico to find jobs.

Suppose that Canada has domestic firms that could supply its entire market for radios at a price of $50,while U.S.firms could supply radios at $40 and Mexico at $30.Suppose that Canada initially has a 50 percent tariff on imports of radios and then forms a free trade area with the United States.As a result,Canada realizes:

What factors influence the extent of trade creation and trade diversion?

Which trade instrument has the European Union used to insulate its producers and consumers of agricultural goods from the impact of changing demand and supply conditions in the rest of the world?

The European Union's variable levy is essentially a sliding-scale tariff applied to imports of agricultural products.

NAFTA is essentially a

In its transition toward capitalism,by the 1990s China permitted free enterprise as well as democracy for its people.

The European Union protects its agricultural producers from import competition by the use of tariff rates that vary directly with world prices.

A widely used indicator to differentiate developed countries from developing countries is:

The larger the size and the greater the number of countries in a customs union,the greater will be the trade-diversion effect.

When the United States,Canada,and Mexico form a free trade area,and Mexico begins importing a product from Canada rather than from the lowest cost world producer.

The figure below depicts the steel market for Portugal,a small nation that is unable to affect the world price.Assume that Germany and France can supply steel to Portugal at a price of $200 and $300 respectively. Figure 8.2.Portugal's Steel Market -Consider Figure 8.2.With free trade Portugal will

Regarding stages of economic integration,a customs union

Comparing life expectancy and adult literacy of developing countries and industrial countries,we tend to see

Under the Generalized System of Preferences program,the industrialized countries agree to maintain lower tariffs on imports of natural resources and higher tariffs on imports of manufactured goods.

A sweatshop includes all of the following except