Question 1

Historically those few developing countries which have succeeded in significantly raising their per-capita income levels

Accepted Answer

A)  did not accomplish this with import-substituting industrialization. 
B)  did accomplish this with import-substituting industrialization. 
C)  tended to provide heavy protection to domestic industrial sectors. 
D)  favored industrial to agricultural or service sectors. 
E)  did so to the detriment of their nearest neighbors. 
A)  did not accomplish this with import-substituting industrialization. 
B)  did accomplish this with import-substituting industrialization. 
C)  tended to provide heavy protection to domestic industrial sectors. 
D)  favored industrial to agricultural or service sectors. 
E)  did so to the detriment of their nearest neighbors. A

Question 2

The "East Asian Miracle" is

Accepted Answer

A)  the ability of so many people to live in such small areas. 
B)  the fact that so many Influenza varieties originate from this region. 
C)  the fact that poor dualistic economies managed to escape the vicious circle of poverty. 
D)  the ability to maintain large positive trade balances with the U.S. 
E)  the advent of completely free labor mobility between east Asian countries. 
A)  the ability of so many people to live in such small areas. 
B)  the fact that so many Influenza varieties originate from this region. 
C)  the fact that poor dualistic economies managed to escape the vicious circle of poverty. 
D)  the ability to maintain large positive trade balances with the U.S. 
E)  the advent of completely free labor mobility between east Asian countries. C

Question 3

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. B

Question 4

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 5

China's recent experience supports the proposition that

Accepted Answer

A)  "economic miracles" are solely to be expected in small countries. 
B)  central planning and socialism can promote sustained economic growth. 
C)  a lessening of income disparities is a prerequisite for economic growth. 
D)  growth in a large country cannot be affected by its foreign sector. 
E)  policy changes can dramatically prompt export oriented growth. 
A)  "economic miracles" are solely to be expected in small countries. 
B)  central planning and socialism can promote sustained economic growth. 
C)  a lessening of income disparities is a prerequisite for economic growth. 
D)  growth in a large country cannot be affected by its foreign sector. 
E)  policy changes can dramatically prompt export oriented growth.

Question 6

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.

Question 7

The remarkable success of the HPAEs proves that

Accepted Answer

A)  trade policy is the key to successful economic growth. 
B)  trade policy is irrelevant to successful economic growth. 
C)  high educational standards is the key to successful economic growth. 
D)  dual economies must suffer economic stagnation. 
E)  trade policy can lead to a higher standard of living for developing countries. 
A)  trade policy is the key to successful economic growth. 
B)  trade policy is irrelevant to successful economic growth. 
C)  high educational standards is the key to successful economic growth. 
D)  dual economies must suffer economic stagnation. 
E)  trade policy can lead to a higher standard of living for developing countries.

Question 8

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

Question 9

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 10

The imperfect capital market justification for infant industry promotion

Accepted Answer

A)  assumes that new industries will tend to have low profits. 
B)  assumes that infant industries will soon mature. 
C)  assumes that infant industries will be in products of comparative advantage. 
D)  assumes that banks can allocate resources efficiently. 
E)  assumes that developing country will reward the donor country. 
A)  assumes that new industries will tend to have low profits. 
B)  assumes that infant industries will soon mature. 
C)  assumes that infant industries will be in products of comparative advantage. 
D)  assumes that banks can allocate resources efficiently. 
E)  assumes that developing country will reward the donor country.

Question 11

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 12

-Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing), what trade policy might gain ABC of economic welfare?

Accepted Answer

Import-substitution

Question 13

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

Accepted Answer

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

Question 14

-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 15

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

Accepted Answer

A)  Developing country exports consist mainly of manufactured goods. 
B)  Developing country exports consist mainly of primary products. 
C)  Commodity export prices are determined in highly competitive markets. 
D)  Commodity export prices are solely determined by developing countries. 
E)  Developing country exports are too diverse. 
A)  Developing country exports consist mainly of manufactured goods. 
B)  Developing country exports consist mainly of primary products. 
C)  Commodity export prices are determined in highly competitive markets. 
D)  Commodity export prices are solely determined by developing countries. 
E)  Developing country exports are too diverse.

Question 16

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 17

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 18

Import substitution policies make use of

Accepted Answer

A)  tariffs that discourage goods from entering a country. 
B)  quotas applied to goods that are shipped abroad. 
C)  production subsidies granted to industries with comparative advantage. 
D)  tax breaks granted to industries with comparative advantage. 
E)  production facilities provided by industrialized countries. 
A)  tariffs that discourage goods from entering a country. 
B)  quotas applied to goods that are shipped abroad. 
C)  production subsidies granted to industries with comparative advantage. 
D)  tax breaks granted to industries with comparative advantage. 
E)  production facilities provided by industrialized countries.

Question 19

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.

Question 20

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.

Exam 11: Trade Policy in Developing Countries

Historically those few developing countries which have succeeded in significantly raising their per-capita income levels

The "East Asian Miracle" is

The infant industry argument calls for active government involvement

China's recent experience supports the proposition that

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

The remarkable success of the HPAEs proves that

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

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

The imperfect capital market justification for infant industry promotion

Statistical evidence suggests that

-Refer to above figure. If the economy were in the initial position (where OmL1 workers were in manufacturing), what trade policy might gain ABC of economic welfare?

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

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

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

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

The HPAE (High Performance Asian Economies) countries

Import substitution policies make use of

The infant industry argument is that

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

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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