Question 1

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

Accepted Answer

A)  export promotion 
B)  import substitution 
C)  international commodity agreements 
D)  Infant Industry promotion 
E)  intra-industry trade practice 
A)  export promotion 
B)  import substitution 
C)  international commodity agreements 
D)  Infant Industry promotion 
E)  intra-industry trade practice A

Question 2

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 changed 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 changed can dramatically prompt export oriented growth E

Question 3

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. A

Question 4

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 5

The high correlation between rapid growth in exports and rapid economic growth observed in several East Asia countries in recent decades

Accepted Answer

A)  proves that export promoting trade policy leads to relatively rapid economic growth. 
B)  proves that a free-trade orientation of trade policy results in rapid economic growth. 
C)  proves that exports help growth, whereas imports impede growth. 
D)  proves that trade policy is the most important policy area for promotion of economic development. 
E)  does not prove that trade liberalization always leads to rapid economic growth. 
A)  proves that export promoting trade policy leads to relatively rapid economic growth. 
B)  proves that a free-trade orientation of trade policy results in rapid economic growth. 
C)  proves that exports help growth, whereas imports impede growth. 
D)  proves that trade policy is the most important policy area for promotion of economic development. 
E)  does not prove that trade liberalization always leads to rapid economic growth.

Question 6

All 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 7

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 8

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 9

In 2003, the per-capita income in China was roughly ________ of that in the U.S.

Accepted Answer

A)  one hundredth 
B)  one eighth 
C)  one half 
D)  the same as 
E)  one twentieth 
A)  one hundredth 
B)  one eighth 
C)  one half 
D)  the same as 
E)  one twentieth

Question 10

The infant industry argument was an important theoretical basis for

Accepted Answer

A)  neo-colonialist theory of international exploitation. 
B)  import-substituting industrialization. 
C)  historiography of the industrial revolution in Western Europe. 
D)  the East-Asian miracle. 
E)  the reduction of tariffs on Western Europe. 
A)  neo-colonialist theory of international exploitation. 
B)  import-substituting industrialization. 
C)  historiography of the industrial revolution in Western Europe. 
D)  the East-Asian miracle. 
E)  the reduction of tariffs on Western Europe.

Question 11

An efficient economy would set the marginal product in the traditional sector

Accepted Answer

A)  lower than that in the modern non-traditional sector. 
B)  higher than that in the modern sophisticated sector. 
C)  equal to that in the modern sophisticated sector. 
D)  lower in the relatively capital intensive sector. 
E)  higher in the relatively capital intensive sector. 
A)  lower than that in the modern non-traditional sector. 
B)  higher than that in the modern sophisticated sector. 
C)  equal to that in the modern sophisticated sector. 
D)  lower in the relatively capital intensive sector. 
E)  higher in the relatively capital intensive sector.

Question 12

To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called

Accepted Answer

A)  export-led growth. 
B)  generalized system of preferences. 
C)  Most Favored Nation. 
D)  reciprocal trade agreement. 
E)  outsourcing. 
A)  export-led growth. 
B)  generalized system of preferences. 
C)  Most Favored Nation. 
D)  reciprocal trade agreement. 
E)  outsourcing.

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

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.

Question 15

The consensus today is that import-substitution protectionist industrial policy has not served the developing countries' growth ambitions well. This fact proves that policies relying on export-driven growth are the "winning ticket" for these countries.

Accepted Answer

Although there are many who draw precise

Question 16

Classical and Neoclassical trade theory makes the case that free trade can bring a country to an optimum and economically efficient use of its resources; and hence is an optimal trade-policy, if the objective is maximizing long term economic growth. There are those who argue that the experience of the Asian Miracle countries, such as Taiwan, South Korea and Singapore verify this argument in the real world. Explain. There are others who argue that the experience of these countries cannot be used to verify or support the argument above. Explain.

Accepted Answer

Both arguments may indeed be made. These

Question 17

-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 18

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 19

Sophisticated theoretical arguments supporting import-substitution policies include

Accepted Answer

A)  terms of trade effects. 
B)  scale economy arguments. 
C)  learning curve considerations. 
D)  the problem of appropriability. 
E)  domestic market failure arguments. 
A)  terms of trade effects. 
B)  scale economy arguments. 
C)  learning curve considerations. 
D)  the problem of appropriability. 
E)  domestic market failure arguments.

Question 20

The "East Asian Miracle" of the "Four Tigers" in the 1960s was replicated by

Accepted Answer

A)  developing countries around the world. 
B)  other East Asian countries. 
C)  Sub Sahara African countries. 
D)  Industrialized countries. 
E)  Eastern European countries. 
A)  developing countries around the world. 
B)  other East Asian countries. 
C)  Sub Sahara African countries. 
D)  Industrialized countries. 
E)  Eastern European countries.

Exam 11: Trade Policy in Developing Countries

Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation?

China's recent experience supports the proposition that

The imperfect capital market justification for infant industry promotion

Statistical evidence suggests that

The high correlation between rapid growth in exports and rapid economic growth observed in several East Asia countries in recent decades

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

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

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

In 2003, the per-capita income in China was roughly ________ of that in the U.S.

The infant industry argument was an important theoretical basis for

An efficient economy would set the marginal product in the traditional sector

To help developing countries expand their industrial base, some industrial countries have reduced tariffs on designated manufactured imports from developing countries below the levels applied to imports from industrial countries. This policy is called

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

The infant industry argument calls for active government involvement

The consensus today is that import-substitution protectionist industrial policy has not served the developing countries' growth ambitions well. This fact proves that policies relying on export-driven growth are the "winning ticket" for these countries.

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

The remarkable success of the HPAEs proves that

Sophisticated theoretical arguments supporting import-substitution policies include

The "East Asian Miracle" of the "Four Tigers" in the 1960s was replicated by

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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