Exam 7: Trade Policies for the Developing Nations

Explain the theory of optimum currency areas.

A sweatshop is a factory that has poor and unsafe working conditions,unreasonable hours for workers,low wages and benefits,and child labor.

To promote stability in commodity markets,International Commodity Agreements have utilized production and export controls,buffer stocks,and multilateral contracts.

Smaller nations may seek safe haven trading arrangements with larger nations when future access to that market seems uncertain.This was reason for the formation of:

What are some of the growth strategies that have been employed by the developing nations? How successful are these strategies?

For the United States,the political debate of joining NAFTA was very intense because of Mexico's

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

Import substitution policies make use of:

As of 1992,the European Union had achieved the monetary union stage of economic integration.

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

Regarding the benefits of regional trade agreements,which of the following is NOT a benefit?

Developing countries tend to have all of the following except

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.If Portugal forms a customs union with France,the resulting trade-diversion effect equals $400.

All of the following nations except ____ have recently utilized export-led (outward oriented) growth policies.

Under NAFTA,Canada,Mexico,and the United States agreed to adopt free trade among each other,but also to fully harmonize their fiscal and monetary policies.

In the short run,Mexico would realize overall welfare gains from becoming a member of the North American Free Trade Agreement if the resulting diseconomies of scale effect more than offset the competition effect.

By 1992 the European Union had become a full-fledged:

For Saudi Arabia,oil exports constitute about ______ of its export revenue

The diagram below illustrates the international tin market.Assume that the producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound. Figure 7.2.Defending the Target Price in Face of Changing Supply Conditions -Consider Figure 7.2.Suppose the supply of tin decreases from S0 to S2.Under a buffer stock system,the buffer-stock manager could maintain the target price by:

Trade creation occurs when imports from a low-cost supplier outside of a customs union are replaced by purchases from a higher-cost supplier within the union.