Exam 7: Trade Policies for the Developing Nations

The diagram below illustrates the international tin market.Assume that producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.1.Defending the Target Price in Face of Changing Demand Conditions -Consider Figure 7.1.Suppose the demand for tin increases from D0 to D1.Under a buffer stock system,the buffer-stock manager could maintain the target price by:

The North American Free Trade Agreement was expected to benefit ____ the most.

Following World War II,Western European nations suffered from balance-of-payments deficits due to reconstruction.

Developing countries include all of the following except

It is widely agreed that import-substitution policies have been a main contributor to above-average growth rates in developing countries.

If a customs union includes the low-cost supplier of the world,there would be no adverse trade-diversion effect that would counteract the positive trade-creation effect.

The United States serves as an example of:

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.

A factor that discourages economic growth in developing countries is

The theory of optimal currency areas concludes that for a currency area to have the best chance of success

Relative to a regional trade agreement,a multilateral trade agreement may be more beneficial to global welfare in that it entails

Figure 7.5 Global Market for Tin -Figure 7.5 represents the global market for tin.The initial equilibrium price and quantity is at point A.As a result of an International Tin Agreement a price range of $3.27 - $4.02 is set.As the supply of tin increases from S0 to S1,the buffer-stock manager will need to

Which nation accounts for the largest amount of OPEC's oil reserves and production?

Comparing per-capita incomes of many developing countries and industrial countries,we tend to see

Figure 8.1 depicts the supply and demand schedules of calculators for Greece,a "small" country that is unable to affect the world price.Greece's supply and demand schedules of calculators are respectively depicted by SG and DG.Assume that Greece imports calculators from either Germany or France.Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit,while France can supply calculators at $30 per unit. Figure 8.1.Effects of a Customs Union -According to Figure 8.1,the formation of a Greece/Germany customs union would result in:

The formation of a regional trading bloc results in trade creation if

A cartel tends to be most successful in maximizing the profits of its members when there are a large number of producers in the cartel and these producers' cost and demand conditions greatly differ from each other.

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

A free trade area is like a customs union except it members adopt a common external tariff structure.

During periods of falling demand for coffee,an International Commodity Agreement could offset downward pressure on price by implementing policies to increase the supply of coffee.