Question 1

The terms of trade for most developing nations over the last thirty years have generally been&#10;A)improving&#10;B)about the same&#10;C)worsening&#10;D)depend largely on the export commodity

Accepted Answer

D

Question 2

The primary exports of developing nations tend to face demand that is _______ and supply that is _______.&#10;A)elastic;elastic&#10;B)inelastic;inelastic&#10;C)elastic;inelastic&#10;D)inelastic;elastic

Accepted Answer

B

Question 3

What is the advantage of a policy of import substitution?&#10;A)setting up an industry to replace imports minimizes risk of failure because the market for the product already exists in the nation as evidenced by the nation's imports of the commodity&#10;B)It is easier for developing nations to protect their domestic market against foreign competition than to force developed nations to lower their trade barriers against their manufactured exports&#10;C)foreign firms are induced to establish tariff factories to overcome the tariff wall of developing nations&#10;D)all of the above.

Accepted Answer

All the options listed are advantages of a policy of import substitution. A) highlights the reduced risk due to existing market demand, B) points out the relative ease of protecting domestic markets compared to penetrating foreign ones, and C) notes the potential for attracting foreign firms to manufacture locally to bypass tariffs.

Question 4

When a nation's commodity terms of trade deteriorate and its single factor terms of trade improve,the nation's welfare:&#10;A)falls&#10;B)rises&#10;C)remains unchanged&#10;D)any of the above

Accepted Answer

When a nation's commodity terms of trade deteriorate, it means that the prices of the commodities it exports have fallen in relation to the prices of the commodities it imports. This leads to a decrease in the nation's income from exports and an increase in the cost of imports, which can make the nation worse off. However, if its single factor terms of trade improve, it means that the price of the factor it exports (e.g. labor or capital) has increased relative to the price of the factor it imports. This can lead to an increase in the nation's income from exports and a decrease in the cost of imports, which can make the nation better off. Overall, if the improvement in single factor terms of trade outweighs the deterioration in commodity terms of trade, the nation's welfare will rise.

Question 5

Supporting the price of a commodity by buying it when its price is low is:&#10;A)a buffer stock&#10;B)a purchase contract&#10;C)an export control&#10;D)a marketing board

Accepted Answer

Supporting the price of a commodity by buying it when its price is low is known as creating a buffer stock. A buffer stock is a reserve stock created by a government to regulate the market price of a particular commodity. When the price of the commodity falls below a certain level, the government buys the excess supply and stores it in a buffer stock. This helps in stabilizing the price of the commodity in the market. Therefore, option A is the correct answer. Purchase contracts are agreements between the buyer and the seller to purchase goods at a certain price and time, while export controls are imposed by governments to restrict the export of certain products. Marketing boards are organizations that regulate the marketing and pricing of various agricultural products. However, none of these options accurately reflects the concept described in the question.

Question 6

Trade cannot be an engine of growth for today's developing nations because:&#10;A)the income elasticity for many of their exports is less than 1&#10;B)there are many substitutes for their goods.&#10;C)technical advances have increased the the raw-material content of many products&#10;D)there are too many trade restrictions.

Accepted Answer

Developing nations often rely on exporting primary products or low-value added goods, which tend to have a low income elasticity of demand. This means that as incomes rise in other countries, demand for their exports may not increase proportionally. Therefore, trade may not necessarily result in significant economic growth for these nations.

Question 7

Which of the following is false with respect to traditional trade theory?&#10;A)it can incorporate changes in factor endowments and technology&#10;B)it leads to the best allocation of resources at any point in time&#10;C)it is a dynamic theory&#10;D)it is based on comparative advantage

Accepted Answer

Traditional trade theory is largely considered static, focusing on the conditions and outcomes at a specific point in time rather than incorporating changes over time, which would be characteristic of a dynamic theory.

Question 8

According to Nurkse,international trade was an engine of growth for:&#10;A)the regions of recent settlements during the 19th century&#10;B)regions of recent settlements during the 20th century&#10;C)developed nations during the 19th century&#10;D)developed nations during the 20th century

Accepted Answer

Nurkse argued that international trade was an engine of growth for regions of recent settlements during the 19th century, as it enabled these areas to export primary products and import manufactured goods, thus facilitating their economic development. For developed nations during the 20th century, however, Nurkse believed that international trade would not necessarily lead to economic growth, as these countries already had established industrial sectors and could face competition from developing countries that could produce the same goods at a lower cost.

Question 9

During the 1950's,1960's and 1970's the predominant growth strategy for developing nations was one of&#10;A)import substitution&#10;B)export orientation&#10;C)communism&#10;D)none of the above

Accepted Answer

During the 1950's, 1960's and 1970's, many developing nations adopted the strategy of import substitution. This strategy focused on developing domestic industries to replace foreign imports and create self-sufficiency. Countries would impose high tariffs on imports and provide incentives for local production. This strategy was implemented to reduce dependency on foreign countries, and promote industrialization and economic growth.

Question 10

Which of the following is not part of the demand for a NIEO?&#10;A)the establishment of international commodity agreements&#10;B)preferential access for the manufactured exports of developed nations&#10;C)removal of the agricultural trade barriers in developed nations&#10;D)increasing the yearly flow of foreign aid to developing nations

Accepted Answer

The demand for a New International Economic Order (NIEO) includes the establishment of international commodity agreements, removal of agricultural trade barriers in developed nations, and increasing the yearly flow of foreign aid to developing nations. However, preferential access for the manufactured exports of developed nations is not part of the demand for a NIEO. Instead, a NIEO would aim to promote the development of industries in developing nations to reduce their dependence on manufactured imports from developed nations.

Question 11

The following region of the world has been the least successful in creating economic development and growth over the last thirty years&#10;A)Latin America&#10;B)Asia&#10;C)Africa&#10;D)Europe

Accepted Answer

The answer of The following region of the world has...

Question 12

Those nations that liberalized trade during the past decade&#10;A)grew faster than those that did not&#10;B)grew more slowly than those that did not&#10;C)grew at about the same rate as those that did not&#10;D)any of the above

Accepted Answer

The answer of Those nations that liberalized trade during the...

Question 13

MacBean found that the export instability faced by developing nations was:&#10;A)not very large and did not seriously interfere with development&#10;B)very large and seriously interfered with development&#10;C)very large but did not seriously interfere with development&#10;D)not very large but seriously interfered with development

Accepted Answer

The answer of MacBean found that the export instability faced...

Question 14

According to traditional trade theory,a developing nation should export the commodity:&#10;A)of its comparative advantage&#10;B)that it cannot produce relatively more efficiently&#10;C)that intensive in the nation's relatively scarce factor&#10;D)that is most differentiated.

Accepted Answer

The answer of According to traditional trade theory,a developing nation...

Question 15

The nation's commodity terms of trade times the productivity index in its export sector gives the nation's&#10;A)income terms of trade&#10;B)double factoral terms of trade&#10;C)single factoral terms of trade&#10;D)barter terms of trade

Accepted Answer

The answer of The nation's commodity terms of trade times...

Question 16

The following is not an example of an international commodity agreement.&#10;A)marketing boards&#10;B)buffer stocks&#10;C)export controls&#10;D)purchase contracts

Accepted Answer

The answer of The following is not an example of...

Question 17

If the prices of a nation's exports and imports both rise,the nation's commodity terms of trade may:&#10;A)improve&#10;B)deteriorate&#10;C)remain unchanged&#10;D)any of the above

Accepted Answer

The answer of If the prices of a nation's exports...

Question 18

Developing nations often experience wildly fluctuating export prices for their primary products because of:&#10;A)inelastic and stable demand and supply&#10;B)elastic and unstable demand and supply&#10;C)inelastic and unstable demand and supply&#10;D)elastic and stable demand and supply

Accepted Answer

The answer of Developing nations often experience wildly fluctuating export...

Question 19

The policy of import substitution was most vigorously followed by:&#10;A)large developing nations during the 1970's&#10;B)large developing nations during the 1960's&#10;C)small developing nations during the 1970's&#10;D)small developing nations during the 1960's

Accepted Answer

The answer of The policy of import substitution was most...

Question 20

Which are is not an advantage of export-oriented industrialization?&#10;A)It overcomes the smallness of the domestic market and allows developing nations to take advantage of economies of scale&#10;B)domestic industries grow accustomed to protection and have an incentive to become more efficient&#10;C)production of manufactured goods for export requires and stimulates efficiency throughout the economy&#10;D)the expansion of manufactured exports is not limited by the size of the domestic market

Accepted Answer

The answer of Which are is not an advantage of...

Question 21

In most developing countries,import substitution policies have resulted in&#10;A)optimal use of excess supplies of labor.&#10;B)industries that are over-capitalized.&#10;C)rapid economic growth.&#10;D)more rapid growth than export-oriented policies.

Accepted Answer

The answer of In most developing countries,import substitution policies have...

Question 22

Why did developing nations that switched from a policy of import substitution to a policy of export promotion generally grow faster during the past decade?

Accepted Answer

The answer of Why did developing nations that switched from...

Question 23

In the 2000s,the most rapid rate of economic growth has been observed in&#10;A)rich countries.&#10;B)globalizers.&#10;C)nonglobalizers.&#10;D)Rate of growth have been roughly equivalent among all groups.

Accepted Answer

The answer of In the 2000s,the most rapid rate of...

Question 24

If the income elasticity of a good is positive but less than 1,as income increases&#10;A)demand for the good will decrease.&#10;B)demand for the good will increase,but less than proportionately to the income increase.&#10;C)demand for the good will increase,but more than proportionately to the income increase.&#10;D)demand will not change.

Accepted Answer

The answer of If the income elasticity of a good...

Question 25

What is the difference between import substitution and export orientation?

Accepted Answer

The answer of What is the difference between import substitution...

Question 26

(a)Why did large developing nations generally follow a policy of import substitution as a strategy for growth during the 1950s,1960s,and 1970s?Why was this not generally possible for small developing nations?
(b)Why was the policy of import substitution generally a failure?

Accepted Answer

The answer of (a)Why did large developing nations generally follow...

Question 27

List four of the Millennium Development Goals.

Accepted Answer

The answer of List four of the Millennium Development Goals....

Question 28

List the current problems facing developing countries?

Accepted Answer

The answer of List the current problems facing developing countries?...

Question 29

Explain why international trade cannot be expected to be the primary engine of growth for today's developing nations.

Accepted Answer

The answer of Explain why international trade cannot be expected...

Question 30

Explain why import substitution strategies have largely been less than successful.

Accepted Answer

The answer of Explain why import substitution strategies have largely...

Deck 11: International Trade and Economic Development