Question 1

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

Accepted Answer

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

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.

Question 3

Brazil's export record in 1999 illustrated the principle that

Accepted Answer

A)  a large country will tend to have few exports. 
B)  a small country will tend to have a high export ratio. 
C)  protectionist policies tend to discourage exports. 
D)  export-promoting policies do not tend to work. 
E)  import substitution policies helped the Brazilian economy. 
A)  a large country will tend to have few exports. 
B)  a small country will tend to have a high export ratio. 
C)  protectionist policies tend to discourage exports. 
D)  export-promoting policies do not tend to work. 
E)  import substitution policies helped the Brazilian economy.

Question 4

-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 5

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.

Question 6

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 7

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 8

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 9

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 10

It is argued that import substitution is a misguided trade policy if the intent is to promote long-term economic growth. Explain the reasons underlying this argument.

Accepted Answer

Import substitution promotes that econom

Question 11

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.

Question 12

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 13

-Refer to above figure. If manufacturing labor were to increase to OmL2, how much value would the economy as a whole gain?

Accepted Answer

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

Question 14

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 15

General equilibrium considerations lead to the realization that import-substituting policies have the effect of

Accepted Answer

A)  discouraging exports. 
B)  encouraging exports. 
C)  encouraging an efficient use of a country's resources. 
D)  generating large tariff revenues for the government. 
E)  creating competitive manufacturing sectors. 
A)  discouraging exports. 
B)  encouraging exports. 
C)  encouraging an efficient use of a country's resources. 
D)  generating large tariff revenues for the government. 
E)  creating competitive manufacturing sectors.

Question 16

To help developing nations strengthen their international competitiveness, many industrial nations have granted tariff reductions to developing nations under the

Accepted Answer

A)  international commodity agreements program. 
B)  multilateral contract program. 
C)  generalized system of preferences program. 
D)  export led growth program. 
E)  import substitution policy. 
A)  international commodity agreements program. 
B)  multilateral contract program. 
C)  generalized system of preferences program. 
D)  export led growth program. 
E)  import substitution policy.

Question 17

A reason why it is difficult for developing countries to maintain a cartel is that

Accepted Answer

A)  the elasticity of demand for a cartel's output decreases over time. 
B)  producers in the cartel have an economic incentive to cheat. 
C)  economic profits discourage other producers from entering the industry. 
D)  producers in the cartel have the motivation to lower prices but not to raise prices. 
E)  tariffs allow producers in the cartel to produce items that make no profit. 
A)  the elasticity of demand for a cartel's output decreases over time. 
B)  producers in the cartel have an economic incentive to cheat. 
C)  economic profits discourage other producers from entering the industry. 
D)  producers in the cartel have the motivation to lower prices but not to raise prices. 
E)  tariffs allow producers in the cartel to produce items that make no profit.

Question 18

The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that

Accepted Answer

A)  high rates of protection tend to harm economic growth. 
B)  the poorer is the country the easier it is for it to "catch up" economically. 
C)  low rates of protection tend to promote economic growth. 
D)  free trade always best stimulates a developing country's economy. 
E)  neither trade liberalization nor import substitution is a foolproof strategy for economic development. 
A)  high rates of protection tend to harm economic growth. 
B)  the poorer is the country the easier it is for it to "catch up" economically. 
C)  low rates of protection tend to promote economic growth. 
D)  free trade always best stimulates a developing country's economy. 
E)  neither trade liberalization nor import substitution is a foolproof strategy for economic development.

Question 19

The relatively rapid economic growth experienced by Chile in the late 1980s

Accepted Answer

A)  supported the conventional Latin American reliance on import substitution. 
B)  relied on the Harris-Todaro model to explain this growth. 
C)  rejected the conventional Latin American reliance on import substitution. 
D)  demonstrated the importance of market failure as a reason for import substitution. 
E)  relied on high tariffs and import substitution. 
A)  supported the conventional Latin American reliance on import substitution. 
B)  relied on the Harris-Todaro model to explain this growth. 
C)  rejected the conventional Latin American reliance on import substitution. 
D)  demonstrated the importance of market failure as a reason for import substitution. 
E)  relied on high tariffs and import substitution.

Question 20

The disappointment with import-substitution policies is in part because

Accepted Answer

A)  of the rapid and continuous growth record of South American countries. 
B)  many countries pursuing this strategy experienced stagnation in their growth. 
C)  this policy is inconsistent with sophisticated economic growth models. 
D)  this policy tended to create world-class industrial competitors. 
E)  of the financial investment lost by the U.S. 
A)  of the rapid and continuous growth record of South American countries. 
B)  many countries pursuing this strategy experienced stagnation in their growth. 
C)  this policy is inconsistent with sophisticated economic growth models. 
D)  this policy tended to create world-class industrial competitors. 
E)  of the financial investment lost by the U.S.

Exam 11: Trade Policy in Developing Countries

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

The "East Asian Miracle" is

Brazil's export record in 1999 illustrated the principle 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?

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

The HPAE (High Performance Asian Economies) countries

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

Import substitution policies make use of

The infant industry argument is that

It is argued that import substitution is a misguided trade policy if the intent is to promote long-term economic growth. Explain the reasons underlying this argument.

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

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

-Refer to above figure. If manufacturing labor were to increase to OmL2, how much value would the economy as a whole gain?

General equilibrium considerations lead to the realization that import-substituting policies have the effect of

To help developing nations strengthen their international competitiveness, many industrial nations have granted tariff reductions to developing nations under the

A reason why it is difficult for developing countries to maintain a cartel is that

The experience of sub-Saharan Africa, as compared to that of "Other Asia" (not including the HPAEs) supports the argument that

The relatively rapid economic growth experienced by Chile in the late 1980s

The disappointment with import-substitution policies is in part because

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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