Deck 18: Trade and Development

Question 1

Almost half of Asia's exports today are sent to:

A) North America.
B) Europe.
C) other Asian countries.
D) the Middle East.

Answer 1

C

Question 2

Tariff escalation makes it harder for developing nations to move up the value-added ladder by imposing higher tariffs on imports of ________ than on ________.

A) raw materials; processed goods
B) processed goods; raw materials
C) primary goods; secondary goods
D) natural resources; finished products

Answer 2

B

Question 3

Which of the following refers to the accumulation of foreign assets,usually financed by primary product export earnings?

A) offshore bank account
B) foreign investment
C) sovereign wealth fund
D) international hedge fund

Answer 3

C

Question 4

According to British economist Paul Collier,which of the following significantly increases the probability that a nation will experience a civil war?

A) low income
B) slow growth
C) dependence on primary commodity exports
D) all of the above

Question 5

Which country is the largest trading partner of the United States?

A) Mexico
B) Canada
C) China
D) Japan

Question 6

________ is the ratio of the prices a nation receives for the goods it exports relative to the prices it receives for the goods it imports.

A) Exchange equilibrium
B) International terms of trade
C) Balance of trade
D) Net exports

Question 7

Which of the following is the price at which anyone holding foreign exchange can convert it into local currency?

A) real exchange rate
B) nominal exchange rate
C) foreign exchange rate
D) national exchange rate

Question 8

Expanded production of primary products can stimulate ________ by making lower-cost primary goods available as inputs to other industries.

A) backward linkages
B) forward linkages
C) horizontal linkages
D) vertical linkages

Question 9

In 2009,which nation replaced Germany as the world's largest exporter of goods?

A) United States
B) Japan
C) Russia
D) China

Question 10

Which term labels the problem that emerging economies could face when experiencing export booms of primary commodities?

A) Holland sickness
B) Dutch disease
C) Netherlands syndrome
D) Dutch illness

Question 11

An increase in nontradables prices causes the real exchange rate (RER)to:

A) appreciate.
B) depreciate.
C) remain unchanged.
D) equal the nominal exchange rate.

Question 12

________ prices are domestic prices without trade.

A) Autarky
B) Commodity
C) Absolute
D) National

Question 13

The best prevention for Dutch disease effects is to avoid or reverse the initial real ________ of the currency.

A) appreciation
B) depreciation
C) devaluation
D) purchasing power

Question 14

Raul Prebisch,Hans Singer,and other economists argued that,over the long run,prices for primary commodity exports on the world markets tend to fall relative to prices of manufactured goods.This concept is known as:

A) export pessimism.
B) import optimism.
C) export cynicism.
D) trade confidence.

Question 15

The bulk of world trade originates and is exchanged between ________ economies.

A) high-income
B) low-income
C) developing
D) closed

Question 16

Adam Smith's term for the situation in which a country has the capacity to produce more than it can sell in the domestic market is known as:

A) safety stock.
B) leftover goods.
C) capacity maximization.
D) vent for surplus.

Question 17

A nation will have a(n)________ of a good when its production of that good is relatively more productive than that of another nation.

A) absolute advantage
B) comparative advantage
C) relative advantage
D) trade advantage

Question 18

Most world trade involves manufactured goods,but ________ still represent about one-third of the value of all traded goods.

A) primary products
B) secondary products
C) intermediate materials
D) processed materials

Question 19

Gains from trade are made up of the gains from ________ plus the gains from ________.

A) population size; diversification
B) exchange; diversification
C) technology; education
D) exchange; specialization

Question 20

________ acts like a tax on economic activity and encourages rent-seeking behavior rather than productive investment.

A) Fraud
B) Bribery
C) Lobbying
D) Corruption

Question 21

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.

-Export pessimism,relative price movements

Question 22

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Tradable goods,nontradable goods

Question 23

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Open trade,winners and losers

Question 24

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Geographic location,trade

Question 25

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Primary products,manufactured goods

Question 26

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Absolute advantage,comparative advantage

Question 27

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Politics,resource traps

Question 28

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Exporting primary products,forward linkages

Question 29

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Dutch disease,exchange rates

Question 30

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Openness to trade,rate of growth in GDP per capita

Question 31

IDs and Paired-Concept Questions
These terms can be used individually as short-answer identification questions, or they can be used in pairs. In the latter case, ask students to explain (1) the meaning and significance of each of the two terms and (2) the relationship between them.
Global exchange,high-income nations