Question 1

What consequence did the countries in the Global South experience as a result of international lending agencies imposing SAPs?

Accepted Answer

Structural Adjustment Programs (SAPs) often led to economic stagnation or minimal growth in many Global South countries due to austerity measures and other conditions imposed by international lending agencies.

Question 2

Hojohn has a sophisticated plan to build his own business.He has laid out timelines and budgets and has sourced suppliers and possible locations for his factory.While he is still in university,he is already demonstrating his ambition and desire to achieve success.According to the text,what title would be given to Hojohn?

Accepted Answer

The description fits that of an entrepreneur, someone who demonstrates ambition and a desire to achieve success by creating and building their own business. The other options (company president, business professional, student executive) do not accurately capture the role and characteristics described in the text.

Question 3

Country X is a newly industrializing country in the era of globalization and transnational trade.Whose economic approach should government mirror in order to stimulate the economy and benefit the citizens?

Accepted Answer

Keynesian economics suggests that government intervention through fiscal policies can help stabilize the economy, stimulate growth, and benefit citizens, which is suitable for a newly industrializing country.

Question 4

In a class discussion,Adrienne argues that the lack of development in some countries is not due to people who lack a work ethic,but rather it is the result of the power nations exploiting the people and the land in these societies.What theory of development provides the basis for Adrienne's argument?

Accepted Answer

Adrienne's argument is based on the dependency theory, which asserts that the underdevelopment of some nations is caused by the rich nations' economic and political exploitation of the poor nations; hence, the power nations exploit the people and the land in these societies. The theory argues that developing nations' relationship with industrialized nations would keep them in a state of dependency, making it difficult for them to advance. This aligns with Adrienne's argument that it is the power nations exploiting the people and the land in these societies rather than their work ethic.

Question 5

What is import substitution?

Accepted Answer

Import substitution refers to a government strategy of promoting domestic industries and reducing foreign dependence by replacing imported goods with domestically-produced goods. This is achieved by imposing import tariffs, subsidies, and regulations to protect and support the domestic industry.

Question 6

Julianne argues that the solutions to economic problems in a country can be found in the private market.Which economist does her assertion reflect?

Accepted Answer

Julianne's assertion reflects the views of Milton Friedman, who believed that the free market was the best way to solve economic problems and that government intervention in the economy should be limited. Friedman was a proponent of laissez-faire economics and emphasized the importance of individual freedom and choice in economic decision-making.

Question 7

In Country X,the land-owning elite were powerful enough to influence the government.The subsequent removal of tariffs by the government,while benefitting the landowners,negatively impacted the local company Acme Manufacturing.As a result,Acme Manufacturing was no longer financially viable and had to shut down.Which term describes the policy that was enacted by the government?

Accepted Answer

Free trade is the policy of removing barriers to international trade, such as tariffs and quotas. In this scenario, the government removed tariffs, which had a negative impact on a local company while benefiting the land-owning elite. This suggests that the policy was free trade, rather than capitalism, mercantilism, or modernization, which do not necessarily involve the removal of tariffs.

Question 8

A factory in Country X purchases raw materials from Country Y to make its product.Profits will be reinvested in the factory,increasing production and profits in Country X.Country Y will never make enough profits from the sale of materials to build its own factory.What theory could be used to explain the relationship that has developed between countries X and Y?

Accepted Answer

The situation described fits the concept of dependency theory, which argues that less developed countries are dependent on more developed countries for economic growth and prosperity. Country X is able to use its profits to reinvest in its own production and continue to grow, while Country Y is perpetually stuck in a cycle of selling raw materials without the ability to develop its own industries.

Question 9

What name is given to an economic system that relies on protected markets and trade monopolies within the market?

Accepted Answer

The economic system described relies on protected markets and trade monopolies, which are key features of mercantilism. A) Free trade is the opposite of protected markets and trade monopolies. B) Closed borders does not necessarily imply protected markets and trade monopolies. C) Capitalism is a broader economic system that does not inherently rely on protected markets and trade monopolies.

Question 10

A professor presented the following argument: "The reason it took Brazil so long to develop was that the citizens did not have the drive and 'need for achievement' necessary to develop business and industry." Which approach is this professor drawing arguments from?

Accepted Answer

The argument presented by the professor aligns with the modernization theory, which suggests that countries will only develop if they adopt a Western-style capitalist system and that development is hindered by traditional values that might pose obstacles to economic growth, such as low levels of motivation and a lack of entrepreneurial skills. This theory is often criticized by scholars who believe that it oversimplifies the complex process of economic development and fails to take into account the impact of historical legacies, global power dynamics, and structural inequalities.

Question 11

You see an economist being interviewed on television and he says,"Neoliberalism has had dramatic and calamitous effects upon developing countries ...especially in the wake of the global financial meltdown.The government needs to enforce strict regulations on the banks and financial institutions of the North,or the global economy will fail." What kind of economist is he?

Accepted Answer

The economist is advocating for strict regulations on banks and financial institutions, which aligns with Keynesian economic theory that emphasizes government intervention in the economy to stabilize it and prevent market failures. The reference to the calamitous effects of neoliberalism on developing countries also suggests a critique of free-market fundamentalism and a preference for more interventionist policies.

Question 12

According to the text's use of the concept,what is neoliberalism?

Accepted Answer

The text defines neoliberalism as a form of capitalism that operates without government regulations or intervention. Option A is incorrect as abundance of goods and services is not related to the concept. Option C and D are also incorrect as they do not accurately describe what neoliberalism means.

Question 13

Minimal state involvement with the economy and development is a core neoliberal belief.What does the text conclude about the countries where rapid development has occurred in the Global South?

Accepted Answer

Countries that experienced rapid development in the Global South often did so through specific government plans and restrictions, indicating a more active role of the state in guiding economic development rather than minimal state involvement as suggested by neoliberal beliefs.

Question 14

What term is given to "the pursuit of competitive enterprises for profit"?

Accepted Answer

The pursuit of competitive enterprises for profit is the core principle of capitalism, which is an economic system where private individuals or businesses own and operate the means of production and distribution of goods and services.

Question 15

Which economist could be identified as a person opposed to Keynesian economic ideals?

Accepted Answer

Milton Friedman is often identified as a leading figure in opposition to Keynesian economics. While he did not reject all of Keynes' ideas, he believed that free markets and limited government intervention were the keys to economic growth and stability. He advocated for monetarism, which focused on controlling the money supply to control inflation and stabilize the economy.

Question 16

From a neoliberal perspective,what would be considered a barrier to a free market?

Accepted Answer

Neoliberalism emphasizes the importance of free markets and limited government intervention. Increasing the minimum wage is seen as a potential barrier to free markets as it can increase costs for businesses and potentially reduce employment opportunities. Therefore, a dollar an hour increase in the minimum wage would be viewed as a hindrance to the free market from a neoliberal perspective.

Answer: C
 Neoliberalism emphasizes the importance of individual initiative and self-discipline. A movement that promotes social values that do not align with these principles, such as a focus on collective or communal values, may be seen as a barrier to the free market as it could potentially hinder individual initiative and reduce the drive for competition and innovation.

Question 17

Sara needs to work to ensure that her children have a good life and receive a good education at a private school.However,she cannot find work in her country that will meet her economic needs and she must travel to a more developed country and send money home.This situation is an indication that a government policy has failed to deliver its economic promise.Which policy is it?

Accepted Answer

Neoliberalism is a policy that emphasizes free market capitalism, privatization, and deregulation. It often leads to a concentration of wealth among a small group of people and may result in a lack of desirable job opportunities for the rest of the population. This situation can force people, like Sara, to leave their home country to find work that will meet their economic needs.

Question 18

Canada's healthcare program is one of the country's emblems of social policy.However,some economists would argue that such social policies are a hindrance to economic success.Why?

Accepted Answer

The answer of Canada's healthcare program is one of the...

Question 19

Structural adjustment programs (SAPs),sponsored by the World Bank and the International Monetary Fund,were introduced to assist with economic growth in the Global South.What kind of successes have these programs had?

Accepted Answer

Growth rates in the south were actually higher in the decade before SAPs were introduced, indicating that these programs may not have been successful in achieving their intended economic growth goals.

Answer: B and D are both incorrect. There is little evidence to suggest that SAPs have led to significant improvements in governing structures or civil society in the Global South.

Answer: C is incorrect. While there have been some individual cases of dramatic economic growth in countries with SAPs, this cannot be attributed solely to the SAPs themselves as there are many other factors that contribute to economic growth. Overall, the success of SAPs remains a topic of debate and controversy.

Question 20

What mechanism of commerce and exchange existed between the metropolitan powers and the Global South?

Accepted Answer

The mechanism of commerce and exchange between the metropolitan powers (North) and the Global South involved the extraction of surplus from the Global South with unfavorable terms of trade, where the products of the Global South were undervalued, and the products of the North were overvalued. This resulted in wealth flowing from the Global South to the North, resulting in economic exploitation of the Global South. Trade agreements and investment were also a part of the process, but mostly with an unfavorable outcome for the Global South, resulting in neo-colonialism. Options A, B, and D are not entirely incorrect, but they do not represent the primary mechanism of commerce and exchange.

Quiz 10: Development and Underdevelopment