Deck 12: International Trade and Economic Growth

Question 1

The goal of economic development is for the _____ countries to achieve a standard of living roughly equivalent to that of _____ countries.

A) developed, developing
B) developing, developed
C) middle-income, low income
D) high-income, middle income
E) middle-income, low-income

Answer 1

developing, developed

Question 2

In the low- and middle income countries _____ and _____ of the population respectively are illiterate.

A) 5%, 10%
B) 7%, 14%
C) 16%, 20%
D) 17%, 38%
E) 48%, 57%

Answer 2

17%, 38%

Question 3

GDP per capita in the high-income countries is approximately:

A) $451.
B) $2,000.
C) $15,000.
D) $38,404.

Answer 3

$38,404.

Question 4

GDP per capita in low-income countries is _____ per year.

A) $635
B) $2,000
C) $5,000
D) $7,500

Question 5

Which of the following is a precondition for economic growth?

A) a high level of technology
B) a high K/L ratio
C) the rule of law
D) free trade
E) a civil war

Question 6

The rule of law is important to economic growth as it is necessary for the enforcement of.

A) free trade
B) emigration
C) contracts
D) industrial policy
E) social security

Question 7

Which of the following is not one of the factors of production?

A) land
B) labor
C) capital
D) property rights
E) rule of law

Question 8

Which of the following countries has a large amount of economic freedom?

A) Hong Kong
B) Libya
C) Zimbabwe
D) Laos
E) Cuba

Question 9

In order for GDP per capita to grow, it is necessary for _____ growth to be in excess of _____ growth.

A) population, GDP
B) labor, capital
C) GDP, population
D) land, capital
E) land, labor

Question 10

The graphical relationship between real GDP and the size of the labor force is known as:

A) the Kuznets curve.
B) the production function.
C) the technology curve.
D) the demand curve
E) the Kuznets curve..

Question 11

The production function:

A) is linear.
B) is undefined for low-income countries.
C) slopes downward and to the right.
D) slopes upward to the right.
E) has a negative slope.

Question 12

-In the figure above, an increase in the labor force:

A) increases real GDP.
B) decreases real GDP.
C) shifts the production function upward.
D) shifts the production function downward.
E) L never changes.

Question 13

-In the figure above, which of the following would cause an upward shift in the production function?

A) an increase in the labor force
B) a decrease in the labor force
C) an increase in the capital stock
D) a decrease in the capital stock
E) a decrease in technology.

Question 14

-In the figure above, which of the following would cause an increase in real GDP?

A) a decline in the labor force
B) an improvement in technology
C) a decrease in the capital stock
D) a decline in technology
E) no change in the labor force or capital stock.

Question 15

-In the figure above, an increase in real GDP with an unchanged labor force could happen as a result of:

A) a smaller capital stock.
B) a higher level of technology.
C) a lower level of technology.
D) higher oil prices.
E) high tariffs.

Question 16

An improvement in technology would tend to:

A) cause a movement to the right along an existing production function.
B) cause a movement to the left along an existing production function.
C) cause an upward shift in the production function.
D) have no effect on the production function.
E) None of the above

Question 17

The theory of comparative advantage indicates that international trade should increase the output of the economy by moving resources from _____ to _____ industries.

A) comparative advantage, comparative disadvantage
B) comparative disadvantage, comparative advantage
C) smaller, larger
D) efficient, inefficient
E) business to government

Question 18

An increase in economic growth that cannot be accounted for by increases in either the labor force or the capital stock is known as an increase in:

A) inefficiency.
B) total factor productivity.
C) labor input.
D) managerial productivity.
E) government efficiency.

Question 19

FDI in a developing country would tend to cause:

A) a reduced level of technology.
B) exploitation of workers.
C) an upward shift of the production function.
D) lower tariff revenues.
E) higher tariffs.

Question 20

Which of the following is responsible for the largest movements of FDI into developing countries?

A) UNIDO
B) UNCTAD
C) MNCs
D) the WTO
E) the IMF

Question 21

Which of the following would not cause an upward shift in the production function in a developing country?

A) FDI
B) technology transfers
C) increasing openness
D) immigration
E) autarky

Question 22

Importing and exporting of goods and services can lead to increases in specialization and knowledge that can:

A) decrease GDP per capita.
B) increase total factor productivity.
C) shift the production function downwards.
D) cause an increase in population.
E) decrease total factor productivity.

Question 23

Which of the following refers to natural resources or the ability to produce certain agricultural products?

A) primary products
B) cheap products
C) import substitution
D) total factor productivity promotion
E) trade policy

Question 24

The possession of primary products in a developing country could:

A) provide a convenient source of revenue for the government.
B) reduce the amount of foreign exchange available.
C) make the development of infrastructure more difficult.
D) not influence industrial development.
E) None of the above

Question 25

In many cases, both the demand and supply of primary products are _____ .

A) elastic
B) inelastic
C) perfectly elastic
D) undefined
E) cannot be changed

Question 26

If primary products are a high percentage of a country's exports then large changes in the price of these commodities could influence the _____ .

A) tariff
B) terms of trade
C) effective rate of protection
D) structure of protection
E) industrial structure

Question 27

Which of the following is a cartel that attempts to influence the world price of crude oil?

A) IEA
B) OPEC
C) UNOCAL
D) EXXON
E) BP

Question 28

The development strategy based on developing industries that will reduce imports is known as:

A) primary production.
B) import substitution.
C) export promotion.
D) FDI intervention.
E) property rights protection

Question 29

Which of the following is not associated with an import substitution development strategy?

A) high tariffs
B) quotas
C) government subsidies to manufacturing
D) replacing imports with domestic producton
E) lower prices for consumers

Question 30

An import substitution strategy tends to lead to:

A) faster economic growth.
B) more jobs in the economy.
C) greater efficiency in the use of resources.
D) more rent seeking behavior.
E) less protectionism

Question 31

A development strategy based on developing industries in line with a country's comparative advantage is known as:

A) Dutch development.
B) import substitution.
C) export promotion.
D) WTO experiment.
E) industrial protection.

Question 32

Which of the following regions has tended to grow fastest during the 1990s?

A) East Asia
B) Latin America
C) Central America
D) Africa
E) the Middle East

Question 33

Which of the following statements is incorrect?

A) Manufacturing requires very little infrastructure.
B) Manufacturing usually is more infrastructure intensive than agriculture.
C) Manufacturing doesn't require increases in human capital.
D) Low taxes on manufacturing will increase exports.
E) None of the above

Question 34

High tariffs are a feature of which of the following development strategies?

A) primary products
B) import substitution
C) export promotion
D) WTO promotion
E) industrial protection

Question 35

Economies using an export promotion development strategy tend to:

A) grow more slowly.
B) create more jobs.
C) earn less foreign exchange.
D) not import products for which that country has a comparative disadvantage.
E) not import commodities.

Question 36

The correct term for "foreign aid" is:

A) foreign exchange.
B) unilateral transfers.
C) grants.
D) official development assistance (ODA).
E) IMF.

Question 37

Which of the following is not part of basic infrastructure in a developing country?

A) water systems
B) electricity systems
C) urban transportation systems
D) IT systems
E) UNIDO

Question 38

ODA in the world economy is approximately:

A) $20 billion.
B) $106 billion.
C) $500 billion.
D) $1 trillion.
E) $10 trillion

Question 39

ODA is less than _____ percent of the collective GDPs of the developing countries.

A) 1
B) 3
C) 5
D) 10
E) 13

Question 40

U.S. ODA is approximately _____ billion.

A) $1
B) $25
C) $50
D) $77
E) $83

Question 41

ODA as a percentage of GDP for all developed countries is approximately _____ .

A) 0.10
B) 0.29
C) 0.52
D) 0.86
E) 1.05

Question 42

A transfer of money from a developed country government to a developing country where there is no repayment involved is known as a _____ .

A) grant
B) loan
C) policy statement
D) nonofficial ODA
E) terms of trade

Question 43

ODA that involves restrictions on how and where the aid may be spent is known as:

A) corrupt aid.
B) mislaid aid.
C) tied aid.
D) useless aid.
E) dead aid.

Question 44

Which of the following part of the World Bank primarily makes loans to middle-income countries for infrastructure?

A) IBRD
B) IDA
C) MIGA
D) UNCTAD
E) UNIDO

Question 45

Which of the following part of the World Bank primarily makes loans to low-income countries?

A) IBRD
B) IDA
C) UN
D) IADB
E) UNCTAD

Question 46

Which part of the World Bank makes loans to private sector firms in developing countries?

A) IBRD
B) IDA
C) IFC
D) MIGA
E) IMF

Question 47

During the 1980s and 1990s, the World Bank was criticized for not taking _____ concerns into account when making loans.

A) solvency
B) discrimination
C) environmental
D) business
E) property rights

Question 48

The most recent World Bank initiatives involve the reduction of _____ in developing countries.

A) malaria
B) ebola
C) crime
D) corruption
E) aid misallocation

Question 49

Which of the following UN agencies was established to assist developing countries in the process of integrating into the world economy?

A) WHO
B) UNCTAD
C) UNIDO
D) UNDP
E) IMF

Question 50

Which of the following UN agencies assists developing countries with problems associated with industrialization?

A) MIGA
B) UNCTAD
C) UNESCO
D) UNIDO
E) IMF

Question 51

Which of the following UN agencies assists the developing countries with trade negotiations?

A) UNCTAD
B) UNDP
C) IFC
D) WTO
E) UNIDO

Question 52

Which of the following is not a UN agency?

A) UNIDO
B) UNCTAD
C) UNDP
D) IFC
E) None of the above

Question 53

Which institution makes loans for infrastructure projects in developing countries?

A) The IMF
B) The EU
C) The World Bank
D) ECLA
E) none of the above

Question 54

Economic development is unrelated to the concept of GDP per capita.

Question 55

Access to basic health care is not part of the problem of economic development.

Question 56

GDP per capita in the low-income countries is approximately $1,877 per year.

Question 57

Mexico is a familiar example of a middle-income country.

Question 58

The low-income countries contain over 37 percent of the world's population but produce only 0.7% of world output.

Question 59

The high-income countries are concentrated in North America and Western Europe.

Question 60

Property rights are not a precondition for economic growth.

Question 61

Economic growth can be enhanced by a reduction in the size of the labor force.

Question 62

An example of a country with a substantial amount of economic freedom is North Korea.

Question 63

Low-income countries usually have high birth rates.

Question 64

With respect to economic growth, only the capital stock in the private sector is important.

Question 65

A change in technology means that an economy can produce less output with more inputs.

Question 66

Because of the shape of the production function, an equal increase in the labor force in a developing versus developed country would tend to yield more economic growth in the latter.

Question 67

An increase in the capital stock would tend to shift the production function upward while an increase in technology would tend to shift it downward.

Question 68

Increases in the capital stock and improvements in technology are mutually exclusive.

Question 69

The theory of comparative advantage indicates that international trade should increase the total output of an economy by moving resources from comparative disadvantage to comparative advantage industries.

Question 70

Empirical tests of openness and economic growth usually show a positive correlation between the two.

Question 71

In order to show that openness causes faster economic growth, it is necessary to show that openness causes the production function to shift upward.

Question 72

More open economies tend to have faster rates of growth of total factor productivity.

Question 73

Empirical research on economic growth indicates that openness tends to increase real GDP.

Question 74

It is difficult for a poor country to rapidly increase its stock of capital.

Question 75

Technology transfers into developing countries tend to lead to an upward shift in the production function.

Question 76

International trade in goods and services can lead to technology transfers even in the absence of FDI.

Question 77

The structure of protection in developed countries may make it difficult for some developing countries to develop a manufacturing industry based on primary products.

Question 78

Frequently, the prices of primary products are volatile because both the demand and supply curves are inelastic.

Question 79

If primary products are a high percentage of a country's GDP then instability in the prices of these products could translate into instability of GDP.

Question 80

Countries that possess primary products always grow faster than countries that do not.