48. The characteristics that have underlaid the economic success of the “high-performing Asian Economies” have
included all of the following except:
a.
High rates of domestic investment
b.
Diseconomies of scale occurring at low output levels
c.
Large endowments of human capital
d.
High levels of labor productivity
United States – BPROG: Reflective Thinking – BPROG: Analysis
East Asian Economies
BLOOM’S: Comprehension
49. The development of countries like South Korea and Singapore has been underlaid by all of the following except:
a.
High domestic interest rates
b.
R&D and product innovation
c.
Education and on-the-job training
d.
High levels of saving and investment
United States – BPROG: Reflective Thinking – BPROG: Analysis
East Asian Economies
BLOOM’S: Comprehension
50. For most developing countries:
a.
Productivity is high among domestic workers
b.
Population-growth and illiteracy rates are low
c.
Saving and investment levels are high
d.
Agricultural goods and raw materials constitute much of domestic output
United States – BPROG: Reflective Thinking – BPROG: Analysis
Trade Problems of the Developing Nations
BLOOM’S: Comprehension
Economic Growth Strategies: Import Substitution Versus Export Led Growth
BLOOM’S: Comprehension
51. East Asian economies have performed well by
a.
Obtaining foreign technology
b.
Remaining open to international trade
c.
Investing in their people
d.
All of the above
52. East Asian economies started enacting export-push strategies
a.
b.
c.
d.
United States – BPROG: Reflective Thinking – BPROG: Analysis
East Asian Economies
BLOOM’S: Knowledge
53. Prior to the formation of the Organization of Petroleum Exporting Countries, individual oil producing nations,
a.
Operated like sellers in a competitive market
b.
Behaved like individual sellers in a monopoly market
c.
Had considerable control over the price of oil
d.
Both b and c.
United States – BPROG: Reflective Thinking – BPROG: Analysis
The OPEC Oil Cartel
BLOOM’S: Comprehension
54. A key factor underlying the instability of primary product prices and export receipts of developing nations is the
a.
Low price elasticity of the demand of primary products
b.
High price elasticity of supply of primary products
c.
High price elasticity of demand of primary products
United States – BPROG: Reflective Thinking – BPROG: Analysis
East Asian Economies
BLOOM’S: Knowledge
d.
None of the above
Figure 7.4 Global Market for Tin
55. Consider the global market for tin represented by figure 7.4. Initially equilibrium is at point A with a market price of
$3.50 per pound and 50,000 pounds. In ordr to keep tin price relatively stable an International Tin Agreement has set a
price floor of $3.27 and a ceiling of $4.02. As the demand for tin increases to D1 how will the buffer-stock manager need
to respond?
a.
buy 10,000 pounds of tin
b.
buy 20,000 pounds of tin
c.
sell 10,000 pounds of tin
d.
sell 20,000 pounds of tin
NATIONAL STANDARDS:
United States – BPROG: Analytic
Stabilizing Primary-Product Prices
BLOOM’S: Analysis
Figure 7.5 Global Market for Tin
NATIONAL STANDARDS:
United States – BPROG: Reflective Thinking – BPROG: Analysis
Stabilizing Primary-Product Prices
BLOOM’S: Comprehension
56. Figure 7.5 represents the global market for tin. The initial equilibrium price and quantity is at point A. As a result of
an International Tin Agreement a price range of $3.27 – $4.02 is set. As the supply of tin increases from S0 to S1, the
buffer-stock manager will need to
a.
buy 10,000 pounds of tin
b.
buy 20,000 pounds of tin
c.
sell 10,000 pounds of tin
d.
sell 20,000 pounds of tin
57. The developing nations are most of those in Africa, Asia, North America, and Western Europe.
a.
True
b.
False
False
Easy
United States – BPROG: Reflective Thinking – BPROG: Analysis
Finance
Developing Nations Trade Characteristics
BLOOM’S: Knowledge
58. Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial
nations.
a.
True
b.
False
True
Moderate
United States – BPROG: Analytic
Stabilizing Primary-Product Prices
BLOOM’S: Analysis
59. The majority of developing-nation exports are primary products such as agricultural goods and raw materials; of the
manufactured goods exported by developing nations, most are labor-intensive goods.
a.
True
b.
False
True
Easy
Finance
60. Developing nations overwhelmingly acknowledge that they have benefited from international trade according to the
principle of comparative advantage.
a.
True
b.
False
False
Moderate
61. Among the economic problems facing developing countries have been low dependence on primary-product exports,
unstable export markets, and worsening terms of trade.
a.
True
b.
False
True
Moderate
Easy
62. For developing countries, a key factor underlying the instability of primary-product prices and export receipts is the
high price elasticity of demand for products such as tin and copper.
a.
True
b.
False
63. Empirical research indicates that the demand and supply schedules for most primary products are relatively inelastic to
changes in price.
a.
True
b.
False
True
Moderate
Finance
64. If the demand for coffee is price inelastic, an increase in the supply of coffee leads to falling prices and rising sales
revenues.
a.
True
b.
False
False
Moderate
65. Not only do changes in demand induce relatively wide fluctuations in price when supply is inelastic, but changes in
supply induce relatively wide fluctuations in price when demand is inelastic.
a.
True
b.
False
True
Moderate
False
Moderate
66. Developing countries have complained that because their commodity terms of trade has deteriorated in recent decades,
they should receive preferential tariff treatment from industrialized countries.
a.
True
b.
False
True
Moderate
67. To promote stability in commodity markets, International Commodity Agreements have utilized production and
export controls, buffer stocks, and multilateral contracts.
a.
True
b.
False
True
Moderate
68. During periods of falling demand for coffee, an International Commodity Agreement could offset downward pressure
on price by implementing policies to increase the supply of coffee.
a.
True
b.
False
False
Moderate
Finance
69. To prevent the market price of tin from rising above the target price, the manager of a buffer stock will purchase
excess supplies of tin from the market.
a.
True
b.
False
70. To prevent the market price of tin from falling below the target price, the manager of a buffer stock would purchase
any excess supply of tin that exists at the target price.
a.
True
b.
False
True
Moderate
71. Prolonged defense of a price ceiling tends to increase the supply of a commodity held by a buffer stock manager, thus
putting downward pressure on price.
a.
True
b.
False
False
Moderate
72. Rather than conduct massive stabilization operations, buffer stock officials will periodically revise target prices should
they move out of line with long-term price trends.
a.
True
b.
False
True
Moderate
False
Moderate
73. A multilateral contract stipulates the maximum price at which importing nations will purchase guaranteed quantities
from producing nations and the minimum price at which producing nations will sell guaranteed amounts to importing
nations.
a.
True
b.
False
False
Moderate
74. It is widely agreed that import-substitution policies have been a main contributor to above-average growth rates in
developing countries.
a.
True
b.
False
False
Moderate
75. Under the Generalized System of Preferences program, the major industrial countries agree to temporarily reduce
tariffs on designated imports from other industrial countries.
a.
True
b.
False
False
Moderate
76. The “newly industrializing countries” of East Asia have emphasized the implementation of import-substitution
policies to insulate their industries from international competition.
a.
True
b.
False
False
77. In recent decades, the East Asian “newly industrializing countries” have pursued export-led growth (outward
orientation) as an industrialization strategy.
a.
True
b.
False
True
Moderate
78. The purpose of a cartel is to support prices higher than would occur under more competitive conditions, thus
increasing the profits of cartel members.
a.
True
b.
False
True
Moderate
79. A cartel tends to be most successful in maximizing the profits of its members when there are a large number of
producers in the cartel and these producers’ cost and demand conditions greatly differ from each other.
a.
True
b.
False
False
Moderate
80. When cartel members agree to restrict output to increase the price of their product, a single member of the cartel has
Moderate
an economic incentive to violate the agreement by increasing its output so as to increase profits.
a.
True
b.
False
81. Developing countries have often felt that it is easier to protect their manufacturers, via import-substitution policies,
against foreign competitors than to force industrial nations to reduce trade restrictions on products exported by developing
countries.
a.
True
b.
False
True
Moderate
Finance
82. Import-substitution policies are supported by the fact that many developing countries have small domestic markets and
thus their producers enjoy the benefits of diseconomies of small-scale production.
a.
True
b.
False
False
Moderate
83. Export-led growth industrialization suffers a major problem: it depends on the willingness and ability of foreign
nations to absorb the goods exported by the country pursuing such a policy.
a.
True
b.
False
True
Moderate
True
Moderate
Finance
84. The so-called Four Tigers include Australia, South Korea, Taiwan, and Hong Kong.
a.
True
b.
False
False
Moderate
85. By the 1990s, China had departed from a capitalistic economy and shifted to a Soviet-type economy encompassing
small-scale, labor-intensive industry.
a.
True
b.
False
False
Easy
Finance
86. During the late 1980s and early 1990s, China dismantled much of its centrally-planned economy and permitted free
enterprise to replace it.
a.
True
b.
False
True
Easy
87. In its transition toward capitalism, by the 1990s China permitted free enterprise as well as democracy for its people.
a.
True
b.
False
False
88. Most of China’s manufactured exports have constituted labor-intensive goods.
a.
True
b.
False
True
Easy
89. In 1999 the United States revoked the normal-trade-relations (most-favored-nation) status it provided China in
retaliation for China’s suppression of human rights.
a.
True
b.
False
False
Easy
90. A multilateral contract specifies the maximum price at which exporting countries agree to sell a product and the
minimum price at which importing countries agree to buy a product.
a.
True
b.
False
True
Moderate
91. As a profit-maximizing cartel, the Organization of Petroleum Exporting Countries would produce a greater output and
Easy
charge a lower price than what would occur in a competitive market.
a.
True
b.
False
92. The success of buffer stocks is limited by the fact that stockpiles of a product may be exhausted after prolonged sales,
while funds may be exhausted after prolonged purchases.
a.
True
b.
False
True
Moderate
93. The United Nation Conference on Trade and Development in 1964 was successful in convincing developing countries
to switch from export-led industrialization to import-substitution industrialization.
a.
True
b.
False
False
Moderate
94. Under the Generalized System of Preferences program, the industrialized countries agree to maintain lower tariffs on
imports of natural resources and higher tariffs on imports of manufactured goods.
a.
True
b.
False
False
Moderate
True
Moderate
Finance
95. The replacement of imports of one nation with imports of another nation is known as “import substitution.”
a.
True
b.
False
False
Moderate
96. During periods of weak demand, the Organization of Petroleum Countries has implemented production (export)
quotas to ensure that excess oil supplies be kept off the market.
a.
True
b.
False
True
Moderate
97. What are some major trade problems faced by developing nations?
Moderate
98. Are economic downturns helpful to cartels?
Moderate
Finance
99. What are some of the growth strategies that have been employed by the developing nations? How successful are these
strategies?
100. Describe the flying-geese pattern of economic growth? What countries have pursued this strategy?