Deck 10: International Trade and Economic Growth

Question 1

If the expansion of an export industry leads to the provision of infrastructure such as roads or airports, this is called a(n)

A) secondary effect.
B) linkage effect.
C) elementary effect.
D) None of the above.

Answer 1

B

Question 2

Recently, many developing countries throughout the world have begun to institute policies that seek to

A) liberalize international trade by lowering trade barriers.
B) reduce dependence on international trade by raising trade barriers.
C) reduce dependence on international trade by instituting laws that call for buying only domestically made goods.
D) Two of the above.

Answer 2

A

Question 3

would likely oppose policies that allowed foreign workers to immigrate more freely.

A) Domestic labor
B) Domestic capital
C) Both domestic labor and capital
D) Neither domestic labor nor capital

Answer 3

A

Question 4

policies involve government support for manufacturing sectors in which a country has potential comparative advantage.

A) Comprehensive development
B) Primary-export-led development
C) Import-substitution development
D) Outward-looking development

Question 5

If Lo is the initial labor force in the economy and Wo is the initial wage, then payments to capital initially are given by area

A) A.
B) B.
C) A + B.
D) not shown in the diagram.

Question 6

economic growth occurs when, after growth, exports and imports rise by the same proportion.

A) Rising
B) Neutral
C) Biased
D) Technological

Question 7

If an economy experiences an increase in its labor force, everything else constant, then its production possibilities frontier (PPF) will

A) expand outward but keep its original shape.
B) expand outward largely in the direction of the labor intensive good.
C) expand outward largely in the direction of the capital intensive good.
D) not expand until capital grows.

Question 8

policies seek to promote rapid industrialization by erecting high barriers to foreign goods to encourage local production,

A) Comparative advantage
B) Primary-export-led development
C) Import-substitution development
D) Outward-looking development

Question 9

policies refer to government programs designed to exploit natural comparative advantage by increasing production of a few export goods most closely related to a country's resource base.

A) Comparative advantage
B) Primary-export-led development
C) Import-substitution development
D) Inward-looking development

Question 10

would gain from expanded immigration.

A) Domestic labor
B) Domestic capital
C) Both domestic labor and capital
D) Neither domestic labor nor capital

Question 11

Economic growth at constant world prices will cause the output of one good to fall absolutely.

A) never
B) sometimes
C) always

Question 12

If an economy experiences an increase in its labor force, everything else constant, then at constant world prices, it will

A) export more, if the country was initially labor abundant.
B) import more, if the country was initially labor abundant.
C) export more, if the country was initially capital abundant.
D) Both A and B above.

Question 13

If immigration were to lead to an inflow of workers so that the overall labor force were to rise to L1, then

A) wages would rise and payments to capital would fall.
B) wages would rise and payments to capital would rise.
C) wages would fall and payments to capital would fall.
D) wages would fall and payments to capital would rise.

Question 14

An example of direct foreign investment is given by

A) the sale of U.S. government bonds to foreigners.
B) the sale of General Motors bonds to foreigners.
C) multinational corporations such as Ford.
D) all of the above.

Question 15

growth is said to occur when a country's welfare falls as the country grows.

A) Protrade biased
B) Antitrade biased
C) Immizerizing
D) Anti-neutral

Question 16

If an economy experiences an increase in its labor force, everything else constant, then at constant world prices, it will

A) produce more of the labor intensive good and less of the capital intensive good.
B) produce more of both goods.
C) produce the same amount of both goods.
D) produce less of the labor intensive good and more of the capital intensive good.

Question 17

Recent guest worker programs have involved temporary migration from

A) poor countries to richer countries.
B) poor countries to other poor countries.
C) rich countries to poor countries.
D) rich countries to other rich countries.

Question 18

Economic growth occurs because

A) labor forces grow.
B) capital stocks grow.
C) new inventions raise productivity.
D) All of the above.

Question 19

Developing countries that concentrate production in agricultural products or raw materials may face a secular decline in their international terms of trade due to

A) sluggish demand for these products in developed countries.
B) large increases in the supplies of these products on world markets due to export expansion policies.
C) inelastic demand for these products in developed countries.
D) All of the above.

Question 20

The rarest migration pattern is for people to move permanently from

A) poor countries to richer countries.
B) poor countries to other poor countries.
C) rich countries to poor countries.
D) rich countries to other rich countries.

Question 21

Import-substitution development policies have been especially effective in promoting employment in newly industrializing sectors because these policies discourage the import of foreign capital goods.

Question 22

As a candidate for president of the United States, Barak Obama was an ardent supporter of outsourcing.

Question 23

Write an essay that compares and contrasts primary-export-led development policies with import-substitution policies.

Question 24

The way in which growth occurs affects the pattern of trade of a country.

Question 25

Rich country to poor country migration is relatively uncommon.

Question 26

The way in which a country grows affects the pattern of trade of a country. True or false. Discuss.

Question 27

What is immizerizing growth? Describe how it could happen and give at least one cited historical example.

Question 28

A key element in outward-looking development policies is to maintain open markets so that internal prices reflect world prices.

Question 29

Immigration tends to lower the income of all factors of production. True or false.

Question 30

The movement of production to affiliate firms outside of the country is known as outsourcing.

Question 31

Economic growth at constant prices will never lead to a fall in the output of one good.

Question 32

Legal immigration to the United States peaked just before World War I, but today is almost zero.

Question 33

Over time, countries grow in a fashion so that their production possibility frontiers always retain the same shape.

Question 34

Economic growth could make a country worse off.

Question 35

The Dutch Disease refers to a deadly outbreak of influenza that destroyed all international trade for the Netherlands in the 1960s.

Question 36

Only a few countries have followed outward-oriented development strategies for extensive periods of time. Which of the following countries is not one of those that have followed such a strategy successfully in the last decades.

A) Russia
B) Japan
C) South Korea
D) Singapore

Question 37

Sale of U.S. government bonds to foreigners is an example of direct foreign investment in the United States.

Question 38

International factor flows tend to lower incomes of those factors in host countries that most directly substitute for that factor, and to raise the incomes of other factors.

Question 39

The ratio of the percentage change in consumption of a good divided by the percentage change in income (as measured by GDP) is known as the

A) income elasticity of demand.
B) income expansion path.
C) demand elasticity equivalent.
D) trade effectiveness.