Deck 17: China and India in the World Economy

Question 1

What did China create to allow more international trade?

A)Special economic zones
B)Foreign exchange centers
C)More open and transparent government meetings
D)New educational efforts

Answer 1

A

Question 2

Openness and change in the economic models of India and China have meant for the world economy all of the following EXCEPT

A)hundreds of millions of people have escaped poverty.
B)many manufactured goods and services have become cheaper.
C)forced some firms to downsize, offshore or otherwise change business practices.
D)increased the market power of firms in industrialized countries as they gained most from this evolving trade.

Answer 2

D

Question 3

Which of the following is true?

A)India is the world's largest democracy.
B)India began reforming and opening its economy prior to China.
C)At the end of the twenty-first century, China will have a larger population than India.
D)India has a larger manufacturing sector than China.

Answer 3

A

Question 4

China's economic reforms began in

A)1960.
B)1978.
C)1991.
D)1998.

Question 5

Analysts that favor a fast transition to market economies argue that China's success with a gradual transition is a special case because

A)its trade flows were relatively large.
B)so much of its labor force was in agriculture.
C)heavy industry already had a strong foothold when the transition began.
D)its coastal areas were already relatively well developed.

Question 6

The largest migration pattern in China at present is from urban centers to more rural areas to escape traffic and pollution.

Question 7

Which of the following countries has the second highest population in the world?

A)Indonesia
B)Russia
C)India
D)China

Question 8

China's initial economic reforms were in which sector?

A)Manufacturing
B)Infrastructure
C)Agriculture
D)Mining

Question 9

India's economic reforms began in

A)1960.
B)1978.
C)1991.
D)1998.

Question 10

The percentage of world GDP represented by the G7 is ________ and the percentage of world GDP represented by China and India is ________.

A)falling; rising
B)falling; falling
C)rising; falling
D)rising; rising

Question 11

Special economic zones in China have been

A)the same as export processing zones.
B)centers of economic reform.
C)controlled by state run enterprises.
D)poor regions that are targeted for industrial development.

Question 12

China's economic reforms have focused on

A)privatizing state-owned enterprises and increasing efficiency.
B)reducing persistent inflation and current account deficits.
C)transitioning from socialism and toward private ownership.
D)reducing exchange rate instability.

Question 13

For China

A)there was a long period of success with the economic results of communism so it was hard to change policies.
B)reform of its economic system was rapid, with a quick dismantling of most of the controls exercised by the state and party over the economic system, but not the political system.
C)economic reforms were intended to create more wealth to distribute, not do undo the communist party.
D)there are no longer state owned enterprises.

Question 14

China has a larger population than India and is expected to be the most populous nation in the world throughout the twenty-first century.

Question 15

Which of the following is FALSE about the transition from communism to capitalism in Russia and China?

A)China chose a dual track strategy.
B)China's transition strategy was considered gradualist.
C)Russia's transition was aided by the large number of workers it had in heavy industry.
D)China's transition was aided by the large number of workers it had in rural agriculture.

Question 16

Which of the following countries has the highest population in the world?

A)Indonesia
B)Russia
C)India
D)China

Question 17

Explain why China and India are considered disruptive to the world's status quo.

Question 18

Which primary trade partner of India suffered setbacks that ultimately helped lead India to embark on economic reform?

A)The United Kingdom
B)The United States
C)The Soviet Union
D)South Korea

Question 19

Which of the following is not a potential source of comparative advantage for China in the manufacturing sector?

A)Abundant low wage, low skill workers
B)A large domestic market that can lead to scale economies
C)Coastal areas with good logistics for international trade
D)Abundant credit from China's government sector to set up manufacturing operations

Question 20

India's economic reforms have focused on

A)privatizing state-owned enterprises and increasing efficiency.
B)reducing persistent inflation and current account deficits.
C)transitioning from socialism and toward private ownership.
D)reducing exchange rate instability.

Question 21

The gravity model predicts that China and India will trade with

A)smaller economies that are close by.
B)larger economies that are close by.
C)larger economies that are distant.
D)smaller economies that are distant.

Question 22

Describe China's reform path,including the forces that started China's reform efforts and how they continued through the 1980s and early 1990s.

Question 23

Who was the leader of India's economic reforms?

Question 24

China has few state-owned enterprises left in its economy.

Question 25

Which of the following is the best explanation of exports and imports in China and India?

A)Exports are heavily subsidized through government policy.
B)Many barriers to imports exist.
C)Exports and imports are tied together, with exports depending on imported inputs and technology.
D)Imports are not important to either nation's economy.

Question 26

Agriculture in India is protected because

A)it is not an important source of employment.
B)it is an infant industry.
C)it is important for national security.
D)it is relatively inefficient.

Question 27

Who was the leader of Chinese economic reforms?

Question 28

Direct foreign investment has been most critical for China's domestic consumer market.

Question 29

Which of the following is NOT a true statement?

A)It is unclear whether any of the decline in U.S. manufacturing employment can be attributed to Chinese growth.
B)China's growth has been beneficial to many countries.
C)China does not import many goods.
D)China had large trade surpluses.

Question 30

China is not an important market for other nations' exports.

Question 31

Tariffs on non-agricultural goods are much higher in India than in China.

Question 32

Russia chose a slow approach to creating a private economy and China chose a fast approach.

Question 33

Which of the following is NOT a true statement?

A)India can easily relocate workers from the country to the city.
B)India would raise income faster if it moved workers from agriculture to manufacturing.
C)High agricultural tariffs in India protect rural workers.
D)India has low tariffs in manufacturing.

Question 34

China's economy did not decline at all during its transition from communism to capitalism.

Question 35

China's economy was much more agricultural than Russia's,and observers believe this aided its economic transition.

Question 36

What is the best explanation for why China and India have received so much international interest and foreign investment?

A)Their large populations
B)Their geographic location
C)Their control over natural resources
D)Government incentives provided to foreign firms

Question 37

Why have China and India received so much international attention and investment?

Question 38

Three forces played a significant role in preparing Indian policy makers for economic reform.Describe them.

Question 39

When explaining China and India's trade patterns,

A)proximity and GDP explain a significant portion.
B)many complex factors determine trading partners.
C)patterns are very different for each country.
D)exchange rates determine most of the pattern of trade.

Question 40

Why did the USSR collapse and China succeed? Explain.

Question 41

Which of the following is NOT a challenge to doing business in China?

A)Issues related to the business climate, such as taxes
B)The availability of credit
C)Failure to protect intellectual property
D)Poor infrastructure and port facilities to support export of products

Question 42

Can U.S.manufacturing job losses be attributed to the growth of manufacturing in China?

Question 43

China is the only country that runs large trade surpluses.

Question 44

India lags China in the development of a large manufacturing sector.

Question 45

In China

A)wages are beginning to rise, reducing its comparative advantage.
B)there is little advantage from scale economies.
C)the middle class is not expanding.
D)poor coastal areas limit trade.

Question 46

Trade in services such as information technology

A)is like other trade; it creates winners and losers, but the gains for national economies likely outweigh the costs.
B)creates gains for India's economy, but national welfare losses for the countries that import these services.
C)make it highly likely that information technology jobs will ultimately disappear in the industrialized countries.
D)is not perceived as threatening by industrialized countries so is unlikely to lead to any protectionist sentiment or pressures in the way the manufacturing does.

Question 47

China exports more services than India.

Question 48

What is the difference between Chinese and Indian trade in services?

Question 49

Some claim that China's trade surpluses are created by currency undervaluation.Is this true? Explain.

Question 50

Why does India argue that the demand for reduction of greenhouse gasses by developed countries is hypocritical?

Question 51

China has a trade deficit in services,while India has a trade surplus in services.

Question 52

Because of China's growth,natural resources

A)are in greater demand, but that demand is mostly going to the previously industrialized nations so it is having little effect on economic development in developing countries.
B)are in greater demand and the natural resources are increasingly coming from developing countries.
C)prices are falling since China has tremendous negotiating power.
D)are not in high demand since labor and capital are the emphasized inputs in Chinese manufacturing.

Question 53

Environmental problems in China

A)increase pressure for decentralization of power and authority from the ruling Communist party.
B)are not recognized by local Chinese interests, but get large amounts of attention from global activists.
C)are improving at a rapid pace in Chinese urban areas.
D)are generally not an issue domestically or globally.

Question 54

The Asian Infrastructure Investment Bank (AIIB)

A)has been very effective in reaching its goals.
B)lends only to Chinese businesses.
C)is as large as the IMF.
D)provides financing to developing countries.

Question 55

Which of the following would NOT be a sign that China wants to become a high technology producer?

A)More patents are being sought and granted in China.
B)Large spending on infrastructure
C)Rapid expansion of science, engineering and research
D)Less emphasis on education spending

Question 56

Which of the following is FALSE about services trade for India and China?

A)China exports more services than India does.
B)India has a trade surplus in services.
C)China has a trade surplus in services.
D)India trades primarily information services and other business services.

Question 57

India would raise income levels faster if workers migrated from the country to the city.

Question 58

Which of the following accurately depicts the situation of India's trade in services and what it might mean for the global economy?

A)It is not perceived as threatening to the industrialized nations so it is likely to grow without any impact.
B)Because it is nothing new, other economies have had time to adjust.
C)It creates only harm to other national economies.
D)It may lead to protectionist sentiment and policies in other nations as comparative advantages shift.