Question 1

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.

Question 2

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

The answer of Classical and Neoclassical trade theory makes the...

Question 3

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.

Question 4

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.

Question 5

-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 labor were...

Question 6

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.

Question 7

-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

The answer of 
-Refer to above figure.If the economy were...

Question 8

The experience of Chile's foreign sector in the last two decades of the 20th century supports the proposition that economic growth is supported by

Accepted Answer

A)  import substitution. 
B)  industrialization policies. 
C)  trade liberalization policies. 
D)  intra-industry trading. 
E)  trade embargoes.

Question 9

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

Question 10

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.

Question 11

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.

Question 12

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

Question 13

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.

Question 14

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.

Question 15

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.

Question 16

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

The answer of The consensus today is that import-substitution protectionist...

Question 17

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.

Question 18

Export-led growth tends to

Accepted Answer

A)  discourage competition in the global economy. 
B)  exploit domestic comparative advantages. 
C)  lead to unemployment among domestic workers. 
D)  help firms benefit from diseconomies of large-scale production. 
E)  lower the overall volume of imports.

Question 19

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

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.

Exam 11: Trade Policy in Developing Countries