Deck 13: Economic Policy Debates in Latin America

Question 1

By the late _____ ISI had led to an economically unsustainable situation in Latin America.

A) 1950s
B) 1960s
C) 1970s
D) 1980s
E) 1990s

Answer 1

C

Question 2

The transition from ISI to more market-oriented economies created:

A) current account deficits.
B) government budget surpluses.
C) fixed exchange rates.
D) high rates of economic growth.
E) large increases in GDP per capita.

Answer 2

A

Question 3

Which economist summarized the main points of the Washington Consensus?

A) Raul Prebisch
B) Sebastian Edwards
C) Carlos Fuentes
D) John Williamson
E) Milton Friedman

Answer 3

John Williamson

Question 4

The Washington Consensus is sometimes referred to as:

A) capitalism.
B) market socialism.
C) black market capitalism.
D) neoliberalism.
E) market liberalism.

Question 5

Which of the following is not part of the Washington Consensus?

A) market determined interest rates
B) relatively free flows of FDI
C) reducing poverty through growth
D) privatization of profitable private-sector firms
E) protection of property rights

Question 6

The Washington Consensus is associated with economic policy in:

A) Cuba
B) Venezuela
C) Russia
D) high-income countries
E) none of the above

Question 7

Which of the following macroeconomic problems leads to lower economic growth?

A) inflation
B) large swings in real GDP
C) low unemployment
D) a and b
E) b and c

Question 8

Financial policy is related to:

A) bank reserves
B) interest rates
C) banking supervision
D) all of the above
E) none of the above

Question 9

Inflation is less of a problem in the presence of:

A) low unemployment.
B) high money supply growth.
C) central bank independence.
D) political control of the central bank.
E) none of the above

Question 10

An independent central bank needs to maintain _____ transparency in its conduct of monetary policy.

A) coordination
B) coherence
C) transparency
D) rigidity
E) none of the above

Question 11

In which country is central bank independence a problem?

A) Chile
B) Venezuela
C) Mexico
D) Panama
E) Ecuador

Question 12

The average Economic Freedom Index score for Latin America is:

A) 2.25.
B) 3.89.
C) 4.62.
D) 5.96.
E) 9.0.

Question 13

Which country in Latin America has the highest Economic Freedom Index score?

A) Chile
B) Paraguay
C) Mexico
D) Uruguay
E) Panama

Question 14

Which country in Latin America has the lowest Economic Freedom Index score?

A) Panama
B) Mexico
C) Chile
D) Venezuela
E) Brazil

Question 15

Structural reforms tend to increase:

A) K.
B) L.
C) R&D.
D) TFP.
E) population growth.

Question 16

Which of the following is related to structural reform?

A) trade policy
B) tax policy
C) labor legislation
D) all of the above
E) none of the above

Question 17

Which of the following is related to structural reform?

A) trade policy
B) financial policy
C) tax policy
D) all of the above
E) none of the above

Question 18

The index of structural reform in Latin America in 2009 was:

A) 0.27
B) 0.38.
C) 0.65.
D) 0.79.
E) 0.92.

Question 19

Which industry in the region is difficult to reform?

A) cotton
B) soybeans
C) retailing
D) banking
E) fishing

Question 20

Which structural reform is easiest to make from a purely technical standpoint?

A) trade policy
B) tax policy
C) banking
D) SOEs
E) none of the above

Question 21

Which of the following might be more closely related to faster economic growth?

A) the moderate left
B) the contestatory left
C) socialist left
D) the fragmented left
E) none of the above

Question 22

Which economist at the University of Chicago was the mentor of the "Chicago Boys"?

A) Milton Friedman
B) George Stigler
C) Arnold Harberger
D) Donald McCloskey
E) none of the above

Question 23

Which country is associated with the Chicago Boys?

A) Mexico
B) Guatemala
C) Argentina
D) Peru
E) Chile

Question 24

In which country are state development banks still important?

A) Honduras
B) Peru
C) Chile
D) Brazil
E) Ecuador

Question 25

Which of the following reduces both growth and equity?

A) low tariffs
B) conditional cash transfers
C) ISI
D) increased spending on infrastructure
E) increased spending on education

Question 26

How did ISI lead to abnormally high profits for industries?

Question 27

How is rent seeking related to the difficulty of removing the remnants of ISI?

Question 28

What are the main points of the Washington Consensus?

Question 29

What are the components of the Washington Consensus? Which one of these could be most easily applied to economic growth in Latin America?

Question 30

Describe the relationship between the Washington Consensus and the Lost Decade.

Question 31

Explain the following statement. The Washington Consensus is a necessary but not sufficient condition for economic growth.

Question 32

Explain the two largest macroeconomic problems of the Lost Decade.

Question 33

What are some of the factors involved in the labor legislation component of the index of structural reform?

Question 34

Describe the changes in the index of structural reform in Latin America since the 1980s.

Question 35

What is the relationship between neoliberalism and the Washington Consensus?

Question 36

Draw a graph and explain how fiscal deficits financed by printing money can lead to
very high inflation.