Question 1

Developing countries that emphasize production in raw materials and agricultural goods may realize a long-run decline in their international terms of trade as the result of

Accepted Answer

A)  inelastic demand for these products in advanced countries 
B)  sizable increases in the amount of these products supplied to the world market 
C)  weak demand for these products in advanced countries 
D)  all of the above

Question 2

The ability of OPEC nations to operate as a successful cartel tend to decrease as

Accepted Answer

A)  the number of members of the cartel decline 
B)  cost of production differences of the cartel members rise 
C)  the demand for oil rises in the world market 
D)  the availability of substitutes for OPEC oil falls

Question 3

If the supply schedule for tin is relatively inelastic to price changes,a decrease in the demand schedule for tin will cause a:

Accepted Answer

A)  Decrease in price and an increase in sales revenue 
B)  Decrease in price and a decrease in sales revenue 
C)  Increase in price and an increase in sales revenue 
D)  Increase in price and a decrease in sales revenue

Question 4

The common agricultural policy of the European Union supports its farmers through a system of

Accepted Answer

A)  variable levies and export subsidies 
B)  fixed import tariffs and export subsidies 
C)  export subsidies and import quotas 
D)  domestic content requirements

Question 5

Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial nations.

Accepted Answer

A) True 
 B)False

Question 6

All welfare effects of a regional trading agreement are static.

Accepted Answer

A) True 
 B)False

Question 7

By the mid-1990s,the European Union had essentially achieved the common market stage of economic integration.

Accepted Answer

A) True 
 B)False

Question 8

If a customs union included all of the countries in the world,there could exist only trade creation,not trade diversion.

Accepted Answer

A) True 
 B)False

Question 9

Under the Generalized System of Preferences program,the major industrial countries agree to temporarily reduce tariffs on designated imports from other industrial countries.

Accepted Answer

A) True 
 B)False

Question 10

In the United States,which group was most likely to be hurt by the North American Free Trade Agreement?

Accepted Answer

A)  Unskilled labor 
B)  Skilled labor 
C)  Owners of capital equipment 
D)  Owners of financial capital

Question 11

The mission of the ______ is to make loans to developing countries aimed toward poverty reduction and economic development,including schools,hospitals,roads,and bridges

Accepted Answer

A)  Bank for International Settlements 
B)  International Monetary Fund 
C)  World Trade Organization 
D)  World Bank

Question 12

A common market

Accepted Answer

A)  Allows the imposition of common external trade barriers against non-members 
B)  Represents less economic integration than a free trade area 
C)  Does not permit free movement of goods among member nations 
D)  Does not allow free movement of factors of production among nations

Question 13

Rather than conduct massive stabilization operations,buffer stock officials will periodically revise target prices should they move out of line with long-term price trends.

Accepted Answer

A) True 
 B)False

Question 14

According to the Generalized System of Preferences of the United States,exports from developing countries face higher import tariff rates than exports from industrialized countries.

Accepted Answer

A) True 
 B)False

Question 15

Developing countries sometimes encounter the tariff-escalation policies of advanced countries.This means that advanced countries

Accepted Answer

A)  impose higher tariffs on processed products than on primary products 
B)  impose higher tariffs on primary products than on processed products 
C)  impose identical tariffs on primary products and processed products 
D)  allow free trade on primary products and processed products

Question 16

Outward-oriented growth strategies place main emphasis on

Accepted Answer

A)  the allocation of resources according to the principle of absolute advantage 
B)  the allocation of resources according to the principle of comparative advantage 
C)  the principle of strategic trade policy 
D)  the principle of industrial policy

Question 17

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an):

Accepted Answer

A)  Free trade area 
B)  Customs union 
C)  Common market 
D)  Economic union

Question 18

An optimal currency area is a region in which it is economically preferable to have a single official currency rather than multiple official currencies.

Accepted Answer

A) True 
 B)False

Question 19

Export-led growth industrialization suffers a major problem: it depends on the willingness and ability of foreign nations to absorb the goods exported by the country pursuing such a policy.

Accepted Answer

A) True 
 B)False

Question 20

Developing countries often argue that their

Accepted Answer

A)  efforts to industrialize are discouraged 
B)  export prices and revenues are very unstable 
C)  terms of trade have deteriorated over time 
D)  all of the above

Exam 7: Trade Policies for the Developing Nations

Developing countries that emphasize production in raw materials and agricultural goods may realize a long-run decline in their international terms of trade as the result of

The ability of OPEC nations to operate as a successful cartel tend to decrease as

If the supply schedule for tin is relatively inelastic to price changes,a decrease in the demand schedule for tin will cause a:

The common agricultural policy of the European Union supports its farmers through a system of

Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial nations.

All welfare effects of a regional trading agreement are static.

By the mid-1990s,the European Union had essentially achieved the common market stage of economic integration.

If a customs union included all of the countries in the world,there could exist only trade creation,not trade diversion.

Under the Generalized System of Preferences program,the major industrial countries agree to temporarily reduce tariffs on designated imports from other industrial countries.

In the United States,which group was most likely to be hurt by the North American Free Trade Agreement?

The mission of the ______ is to make loans to developing countries aimed toward poverty reduction and economic development,including schools,hospitals,roads,and bridges

A common market

Rather than conduct massive stabilization operations,buffer stock officials will periodically revise target prices should they move out of line with long-term price trends.

According to the Generalized System of Preferences of the United States,exports from developing countries face higher import tariff rates than exports from industrialized countries.

Developing countries sometimes encounter the tariff-escalation policies of advanced countries.This means that advanced countries

Outward-oriented growth strategies place main emphasis on

Suppose that steel from Japan faces a 20 percent tariff in France and a 25 percent tariff in Italy,while France and Italy maintain free trade between each other.France and Italy are therefore part of a (an) :

An optimal currency area is a region in which it is economically preferable to have a single official currency rather than multiple official currencies.

Export-led growth industrialization suffers a major problem: it depends on the willingness and ability of foreign nations to absorb the goods exported by the country pursuing such a policy.

Developing countries often argue that their