Trade Strategies For Economic Growth & Development

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  • 1/50 Questions

    When a country produces just a few major products, it may suffer from the problem of: 

    • Interdependence
    • Independence
    • Over-specialization
    • Trade diversion
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Economic Development Quizzes & Trivia
About This Quiz

Read pages 367 to 377 in the textbook (IB Economics- A Course Companion) and answer the questions which follow.

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  • 2. 

    If a country is dependent on a narrow range of exports, then they face great: 

    • Vulnerability

    • Uncertainty

    • Fluctuations in economic growth

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    If a country is dependent on a narrow range of exports, it means that their economy relies heavily on a small number of products or industries. This makes them vulnerable to external shocks, such as changes in global demand or prices for those specific exports. It also creates uncertainty as any disruption in the export market can have a significant impact on the country's economy. Additionally, the country is likely to experience fluctuations in economic growth as the demand for their exports may vary over time. Therefore, all of the above options - vulnerability, uncertainty, and fluctuations in economic growth - are correct.

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  • 3. 

    Countries that were dependent on the export of a small range of low-skill manufactured goods such as textiles were damaged when China joined the _____________ and sharply increased the supply of textiles on world markets

    • OECD

    • WTO

    • IMF

    • World Bank

    Correct Answer
    A. WTO
    Explanation
    When China joined the WTO, it significantly increased the supply of textiles on world markets. This had a negative impact on countries that relied heavily on exporting a limited range of low-skill manufactured goods, such as textiles. The increased competition from China's textile industry caused damage to these countries' economies, as they were unable to compete with the lower prices and larger quantities offered by China. Therefore, the correct answer is WTO.

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  • 4. 

    The price elasticity of demand for commodities and the price elasticity of supply for commodities (on the world market) tend to be:

    • Relatively elastic

    • Very inelastic

    • Very elastic

    • Relatively inelastic

    Correct Answer
    A. Relatively inelastic
    Explanation
    The price elasticity of demand for commodities and the price elasticity of supply for commodities on the world market tend to be relatively inelastic. This means that changes in price have a relatively small impact on the quantity demanded or supplied. This is because commodities often have limited substitutes and are essential for many industries and consumers. Therefore, even if the price increases, the demand or supply does not change significantly.

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  • 5. 

    Any economic policy that is aimed at supporting domestic producers at the expense of foreign producers is called: 

    • Trade diversion

    • Trade creation

    • Protectionism

    • Nationalistic behavior.

    Correct Answer
    A. Protectionism
    Explanation
    Protectionism refers to any economic policy that is aimed at protecting domestic producers by imposing barriers on foreign producers. This can include measures such as tariffs, quotas, subsidies, and regulations that make it more difficult or expensive for foreign producers to compete in the domestic market. The goal of protectionism is to give domestic producers a competitive advantage and promote domestic industries.

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  • 6. 

    If protectionist measures prevent developing countries from utilizing their (i) ________________ advantage (through exporting to developed countries), then developing countries will be limited in their ability to earn (ii)____________ exchange. 

    • (i) absolute (ii) foreign

    • (i) comparative (ii) foreign

    • (i) trade (ii) hard currency

    • (i) comparative (ii) real.

    Correct Answer
    A. (i) comparative (ii) foreign
    Explanation
    If protectionist measures prevent developing countries from utilizing their comparative advantage (through exporting to developed countries), then developing countries will be limited in their ability to earn foreign exchange. Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. By specializing in the production of goods or services in which they have a comparative advantage, developing countries can export these products to developed countries and earn foreign exchange. However, if protectionist measures restrict this trade, developing countries will not be able to fully exploit their comparative advantage and earn foreign exchange.

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  • 7. 

    America's cotton, dairy, and rice farmers receive billions of dollar every year in the form of:

    • Grants

    • Subsidies

    • Quotas

    • All of the above

    Correct Answer
    A. Subsidies
    Explanation
    America's cotton, dairy, and rice farmers receive billions of dollars every year in the form of subsidies. Subsidies are financial assistance provided by the government to support and protect certain industries or sectors. In this case, the government provides financial aid to cotton, dairy, and rice farmers to help them overcome challenges and remain competitive in the market. These subsidies can help cover costs, stabilize prices, and ensure a steady income for farmers, ultimately supporting the agricultural industry as a whole.

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  • 8. 

    Subsidies in the US and European Union, encourage farmers to produce more, forcing down the world

    • Tariff

    • Benchmark

    • Quota

    • Price

    Correct Answer
    A. Price
    Explanation
    Subsidies in the US and European Union incentivize farmers to increase their production. This increased production leads to a surplus of agricultural products in the global market, causing the prices to decrease. Therefore, subsidies indirectly influence and force down the world price of agricultural products.

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  • 9. 

    Due to subsidies in developed countries, small scale farmers in developing countries are effectively deprived of the ability to: 

    • Export to developed countries

    • Earn a living

    • Provide for their families

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    Small scale farmers in developing countries are effectively deprived of the ability to export to developed countries, earn a living, and provide for their families due to subsidies in developed countries. These subsidies create an uneven playing field, making it difficult for small scale farmers in developing countries to compete in international markets. As a result, they are unable to access the lucrative markets of developed countries, which hampers their ability to earn a living and provide for their families. Therefore, the correct answer is all of the above.

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  • 10. 

    What is tariff escalation? 

    • The rate of tariffs on goods rises the more the goods are bought by consumers

    • The rate of tariffs on goods rises the more the goods are processed

    • The rate of tariffs on goods rises when dumping can be proved by the WTO

    • The rate of tariffs on goods rises in accordance with the supply / demand for the good.

    Correct Answer
    A. The rate of tariffs on goods rises the more the goods are processed
    Explanation
    Tariff escalation refers to the increase in the rate of tariffs on goods as they go through different stages of processing. This means that the more a product is processed, the higher the rate of tariffs imposed on it. This can be seen as a way to protect domestic industries by discouraging the importation of finished goods and promoting the development of domestic processing industries. By increasing the tariffs on processed goods, countries aim to incentivize local production and value addition to raw materials.

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  • 11. 

    Due to tariff escalation, there is little incentive for developing countries to _____________ away from producing raw materials to producing more processed goods. 

    • Trade

    • Manufacturer

    • Diversify

    • Stay

    Correct Answer
    A. Diversify
    Explanation
    Due to tariff escalation, developing countries face higher trade barriers and costs when trying to export processed goods. As a result, there is little motivation for them to shift away from producing raw materials and instead focus on producing more processed goods. Diversifying their production would require significant investment and effort, but the lack of incentives makes it less likely for them to do so.

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  • 12. 

    Tariff escalation is widely observed in: 

    • Textile markets

    • Agriculture markets

    • Mineral-resource markets

    • Foreign exchange markets

    Correct Answer
    A. Agriculture markets
    Explanation
    Tariff escalation refers to the practice of imposing higher tariffs on processed or value-added products compared to raw materials or intermediate goods. This is done to protect domestic industries and promote local processing. In agriculture markets, tariff escalation is commonly observed as countries aim to protect their farmers and agricultural products by imposing higher tariffs on processed or value-added agricultural goods. This encourages domestic processing and discourages imports of processed agricultural products, thereby supporting the growth of the domestic agricultural industry.

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  • 13. 

    Another factor that prevents developing countries from gaining access to  international markets is that some have _______________ currencies. 

    • Soft

    • Free floating

    • Low value

    • Non-convertible

    Correct Answer
    A. Non-convertible
    Explanation
    Non-convertible currencies refer to currencies that cannot be easily exchanged for other currencies or used in international transactions. This prevents developing countries from gaining access to international markets because they are unable to participate in global trade and investment activities. Without a convertible currency, these countries face difficulties in attracting foreign investors and expanding their exports. This lack of access to international markets hinders their economic growth and development.

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  • 14. 

    Economic growth is not economic ________________ but it can generate extra income for governments, firms and people that may led to ______________

    • Progress

    • Development

    • Trade

    • Opportunity

    Correct Answer
    A. Development
    Explanation
    Economic growth is not solely about progress, but it can generate extra income for governments, firms, and people that may lead to development. Economic development encompasses a broader scope, including improvements in living standards, infrastructure, education, healthcare, and overall societal well-being. While economic growth focuses on increasing the size of the economy, economic development emphasizes the quality of life and the holistic advancement of a society.

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  • 15. 

    Import substitution is more formally known as import substitution _______________

    • Trade

    • Industrialization (ISI)

    • Development (ISD)

    • Programs (ISP)

    Correct Answer
    A. Industrialization (ISI)
    Explanation
    Import substitution is a strategy adopted by countries to promote domestic industrialization by replacing imported goods with domestically produced goods. This strategy aims to reduce dependence on foreign imports and stimulate the growth of domestic industries. Therefore, the correct answer is industrialization (ISI) as it accurately describes the main objective of import substitution policies.

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  • 16. 

    When a developing country adopts a policy of ISI it will: 

    • Produce goods domestically rather than import them.

    • Import more essential goods to satisfy domestic demand but export goods where the country has a comparative advantage.

    • Produce goods domestically and export all these goods to the world.

    • Import about the same volume of exports.

    Correct Answer
    A. Produce goods domestically rather than import them.
    Explanation
    When a developing country adopts a policy of ISI (Import Substitution Industrialization), it means that the country focuses on producing goods domestically instead of relying on imports. This policy aims to protect domestic industries, reduce dependence on foreign goods, and promote self-sufficiency. By producing goods domestically, the country can stimulate economic growth, create job opportunities, and retain capital within the country. This approach also helps to reduce trade deficits and build a strong domestic industrial base.

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  • 17. 

    ISI is the opposite of:

    • Comparative advantage

    • Absolute advantage

    • Export led growth

    • All of the above.

    Correct Answer
    A. Export led growth
    Explanation
    Export-led growth refers to a strategy where a country focuses on increasing its exports as a means to stimulate economic growth. In contrast, ISI (Import Substitution Industrialization) is a strategy where a country aims to reduce its dependence on imports by promoting domestic industries to produce goods that were previously imported. Therefore, export-led growth is the opposite of ISI, as it emphasizes increasing exports rather than reducing imports. The other options, comparative advantage and absolute advantage, are concepts related to international trade and are not directly opposite to ISI.

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  • 18. 

    Economists that believe in free trade would: 

    • Support a policy of ISI, but only in the short term.

    • Oppose a policy of ISI

    • Argue for a policy of export led growth

    • Two of the above answers are correct.

    Correct Answer
    A. Two of the above answers are correct.
    Explanation
    The correct answer is "Two of the above answers are correct." Economists that believe in free trade would oppose a policy of ISI (Import Substitution Industrialization) because it restricts imports and promotes domestic production. Free trade economists argue for a policy of export-led growth, as it encourages countries to specialize in producing goods that they have a comparative advantage in and allows them to benefit from international trade. Therefore, both opposing ISI and advocating for export-led growth align with the principles of free trade.

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  • 19. 

    Traditionally countries which adopted a policy of ISI focused on industries that were: 

    • Labour-intensive

    • Low-skilled manufacturing

    • Not dependent on large investments in capital equipment.

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The correct answer is "All of the above" because countries that adopted a policy of ISI (Import Substitution Industrialization) focused on industries that met all three criteria mentioned in the options. These industries were labor-intensive, meaning they required a significant amount of manual labor. They were also low-skilled manufacturing industries, which did not require specialized or advanced skills. Additionally, they were not dependent on large investments in capital equipment, indicating that they did not require substantial financial resources for machinery or technology. Therefore, all the options mentioned in the question are correct.

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  • 20. 

    With a policy of ISI  a government will:

    • Provide subsidies to domestic industries and implement tariffs against imports.

    • Remove barriers to free trade, but maintain subsidies to local industries

    • Provide subsidies to domestic industries, but export more to the developed world.

    • None of the above.

    Correct Answer
    A. Provide subsidies to domestic industries and implement tariffs against imports.
    Explanation
    A government with a policy of ISI (Import Substitution Industrialization) aims to promote domestic industries by providing them with subsidies and protecting them from foreign competition through the implementation of tariffs on imports. This policy is typically adopted by developing countries as a means to reduce dependency on imported goods and stimulate domestic production. By providing subsidies, the government encourages the growth and development of local industries, while tariffs on imports make foreign products more expensive, thereby making domestic goods more competitive in the market.

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  • 21. 

    The advantages of ISI include: 

    • It protects local jobs

    • It protects local cultures and social habits

    • It protects an economy from MNCS

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    ISI stands for Import Substitution Industrialization, which is an economic policy aimed at protecting domestic industries from foreign competition. The advantages of ISI include protecting local jobs by reducing dependence on imports and promoting the growth of domestic industries. It also protects local cultures and social habits by preserving traditional industries and preventing the homogenization of culture through the dominance of foreign products. Additionally, ISI protects the economy from multinational corporations (MNCs) by promoting the development of local industries and reducing reliance on foreign companies. Therefore, the correct answer is "All of the above."

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  • 22. 

    ISI means that a country does not enjoy the benefits to be gained from _______________________ and specialization and therefore it could be producing products relatively inefficiently.  

    • Absolute advantage

    • Comparative advantage

    • Nationalization

    • WTO membership

    Correct Answer
    A. Comparative advantage
    Explanation
    ISI stands for Import Substitution Industrialization, which means that a country focuses on producing goods domestically instead of importing them. This approach often leads to a lack of exposure to international markets and limited access to global resources and technology. As a result, the country may not be able to take advantage of the benefits that come from comparative advantage and specialization. Comparative advantage refers to a country's ability to produce goods at a lower opportunity cost compared to other countries. Therefore, the correct answer is comparative advantage.

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  • 23. 

    When countries implement a policy of ISI other countries may:

    • Welcome the decision and attempt to increase trade with this country

    • Implement similar policies, while trying to encourage more trade.

    • Take retaliatory measures, involving more protectionist policies.

    • Adopt the counter-argument and implement less protectionist measures.

    Correct Answer
    A. Take retaliatory measures, involving more protectionist policies.
    Explanation
    When a country implements a policy of ISI (Import Substitution Industrialization), it means they are focusing on producing goods domestically instead of importing them. In this scenario, other countries may take retaliatory measures by implementing more protectionist policies. This means they may increase trade barriers such as tariffs or quotas to limit imports from the country implementing ISI. By doing so, they aim to protect their own domestic industries from competition and maintain a favorable trade balance. This response is a common reaction when countries perceive that their own industries and trade interests are being negatively affected by another country's economic policies.

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  • 24. 

    Countries which have adopted ISI policies include: 

    • Argentina

    • Brazil

    • Mexico

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    The correct answer is "All of the above" because all three countries mentioned (Argentina, Brazil, and Mexico) have indeed adopted ISI (Import Substitution Industrialization) policies. ISI refers to a development strategy pursued by many developing countries in the mid-20th century, aiming to promote domestic industries by substituting imports with domestically produced goods. These countries implemented protectionist measures, such as high tariffs and subsidies, to encourage local production and reduce dependence on foreign goods. Therefore, since all three countries mentioned have adopted ISI policies, the answer "All of the above" is correct.

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  • 25. 

    Export promotion or export led growth is an ________________ oriented growth strategy.

    • Inward

    • Outward

    • International

    • None of the above.

    Correct Answer
    A. Outward
    Explanation
    Export promotion or export led growth is an outward oriented growth strategy because it focuses on increasing a country's exports by promoting trade and engaging in international markets. This strategy involves policies and measures that aim to enhance a country's competitiveness in the global market, such as providing export subsidies, improving infrastructure, and facilitating trade agreements. By encouraging exports, countries can stimulate economic growth, create job opportunities, and attract foreign investment. Therefore, the correct answer is outward.

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  • 26. 

    In order to achieve export led growth, it is assumed the country will adopt certain policies.  These include:

    • Liberalized Trade

    • Liberalized Capital Flows

    • A floating exchange rate

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    To achieve export-led growth, a country needs to adopt certain policies. Liberalized trade allows for the free flow of goods and services across borders, promoting exports. Liberalized capital flows enable the movement of capital in and out of the country, attracting foreign investment and stimulating economic growth. A floating exchange rate allows the currency to adjust based on market forces, making exports more competitive. Therefore, all of the above policies are necessary for a country to achieve export-led growth.

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  • 27. 

    A focus on export lead growth is usually on increasing 

    • Agricultural exports

    • Manufacturing exports

    • Tertiary services

    • All of the above

    Correct Answer
    A. Manufacturing exports
    Explanation
    A focus on export lead growth usually involves increasing manufacturing exports. This is because manufacturing exports contribute significantly to a country's economic growth and development. By promoting and expanding manufacturing industries, countries can increase their exports and generate more revenue. This can lead to job creation, technological advancements, and overall economic prosperity.

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  • 28. 

    The Asian Tiger economies pursued a strategy of export led growth.  Which countries use to be considered the Asian Tigers? 

    • Cambodia, Vietnam, India and Sri Lanka

    • Australia, New Zealand, Singapore and Hong Kong

    • The Philippines, Hong Kong, Singapore and Taiwan

    • South Korea, Hong Kong, Singapore and Taiwan

    Correct Answer
    A. South Korea, Hong Kong, Singapore and Taiwan
    Explanation
    The Asian Tiger economies, which include South Korea, Hong Kong, Singapore, and Taiwan, pursued a strategy of export-led growth. These countries focused on exporting goods and services to other countries, which helped drive their economic growth and development. By promoting exports, these countries were able to attract foreign investment, create jobs, and increase their foreign exchange reserves. This strategy allowed them to rapidly industrialize and modernize their economies, leading to significant economic success and development.

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  • 29. 

    The Asian Tiger economies have transitioned from a focus on low cost-labor intensive methods to ___________ intensive production methods

    • Capital

    • Human

    • Technology

    • All of the above.

    Correct Answer
    A. Capital
    Explanation
    The correct answer is capital. The Asian Tiger economies have shifted their focus from low-cost labor-intensive methods to capital-intensive production methods. This means that they now rely more on investments in machinery, technology, and infrastructure to increase productivity and efficiency. By investing in capital, these economies aim to achieve higher levels of economic growth and development.

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  • 30. 

    The Asian Tiger economies experienced success because the government played an important role in:

    • Providing infrastructure

    • Promoting savings

    • Improving technology.

    • All of the above.

    Correct Answer
    A. All of the above.
    Explanation
    The Asian Tiger economies experienced success because the government played an important role in providing infrastructure, promoting savings, and improving technology. These factors are crucial for economic growth and development. Infrastructure, such as transportation networks and communication systems, is essential for facilitating trade and business activities. Promoting savings encourages investment and capital accumulation, which can drive economic expansion. Improving technology enhances productivity and competitiveness. By actively addressing these areas, the government contributed to the success of the Asian Tiger economies.

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  • 31. 

    Which industry in the tertiary sector could be a common export for developing countries? 

    • Banking and Financial Services

    • Manufacturing

    • Tourism

    • Schools and Universities.

    Correct Answer
    A. Tourism
    Explanation
    Tourism is a common export for developing countries in the tertiary sector because it involves the movement of people from one country to another for leisure, business, or other purposes. Developing countries often have unique attractions such as natural landscapes, cultural heritage, and historical sites that can attract international tourists. Tourism can bring in foreign exchange, create job opportunities, and stimulate economic growth. Additionally, developing countries can promote their tourism industry through marketing campaigns and infrastructure development to attract more tourists and generate revenue.

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  • 32. 

    Some Asian Tiger economies also protected sunrise industries, which is also called the:

    • Infant industry argument for protectionism

    • Employment argument for protectionism

    • Nationalistic argument for protectionism

    • Fairtrade argument for protectionism.

    Correct Answer
    A. Infant industry argument for protectionism
    Explanation
    The correct answer is the infant industry argument for protectionism. This refers to the practice of protecting emerging industries in order to give them time to grow and become competitive in the global market. By shielding these industries from foreign competition through tariffs or subsidies, governments aim to nurture them until they can stand on their own. This strategy is often employed by developing countries to promote economic growth and reduce dependence on imports.

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  • 33. 

    It has been argued by some economists that free market, export led growth, may increase: 

    • Political pressure on the government

    • The need for subsidies for those industries that cannot compete.

    • The desire for people to seek a new life in a developed country.

    • Income inequality

    Correct Answer
    A. Income inequality
    Explanation
    Export-led growth in a free market can lead to income inequality. This is because the benefits of export-led growth are often concentrated in certain industries or regions, leading to a disparity in income distribution. As industries that cannot compete may require subsidies, the government may face political pressure to address this issue. Additionally, the desire for people to seek a new life in a developed country can be driven by income inequality, as individuals may perceive better economic opportunities in these countries.

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  • 34. 

    The removal or reduction in trade barriers between countries is called:

    • Export promotion

    • Export-led grwoth

    • Trade liberalization

    • WTO guidelines

    Correct Answer
    A. Trade liberalization
    Explanation
    Trade liberalization refers to the process of removing or reducing trade barriers between countries, such as tariffs, quotas, and restrictions. This allows for the free flow of goods and services across borders, promoting international trade and economic growth. Export promotion and export-led growth focus more on strategies to increase exports, while WTO guidelines refer to the rules and regulations set by the World Trade Organization. Therefore, trade liberalization is the most appropriate term to describe the removal or reduction of trade barriers between countries.

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  • 35. 

    In 1989, the American Economist - John Williamson identified ten common reforms, necessary for economic growth in developing countries.   Which of the following is not one of those reforms?

    • Privatization and deregulation

    • Liberalization of FDI inflows.

    • Interest rate liberalization

    • An increase in tax rates for high income earners.

    Correct Answer
    A. An increase in tax rates for high income earners.
    Explanation
    John Williamson identified ten common reforms necessary for economic growth in developing countries in 1989. These reforms include privatization and deregulation, liberalization of FDI inflows, and interest rate liberalization. However, an increase in tax rates for high income earners is not one of the reforms identified by Williamson.

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  • 36. 

    The free market reforms advocated by Williamson, the World Bank and the IMF became known as:

    • The UN Consensus

    • The Washington Consensus

    • WTO Consensus

    • All of the above.

    Correct Answer
    A. The Washington Consensus
    Explanation
    The correct answer is "The Washington Consensus." The free market reforms advocated by Williamson, the World Bank, and the IMF became known as the Washington Consensus. This term refers to a set of economic policies that were promoted by these institutions in the 1980s and 1990s, emphasizing liberalization, privatization, and deregulation. The Washington Consensus aimed to promote economic growth and development, particularly in developing countries, but it has also been criticized for its negative impact on social and economic inequality.

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  • 37. 

    Criticism of the Washington consensus became known as the:

    • Anti-Globalization Movement

    • Third World First Movement

    • Nationalism & Internationalism

    • All of the above

    Correct Answer
    A. Anti-Globalization Movement
    Explanation
    The correct answer is the Anti-Globalization Movement. The Washington Consensus refers to a set of neoliberal economic policies advocated by international financial institutions such as the World Bank and the International Monetary Fund. However, these policies faced significant criticism for their negative impacts on developing countries, leading to the emergence of a global movement against globalization and the Washington Consensus. This movement, known as the Anti-Globalization Movement, aimed to challenge the dominance of neoliberal economic policies and promote alternative approaches to development.

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  • 38. 

    Those that oppose the reforms of the Washington consensus claim that is has:

    • Allowed MNCs to exploit workers in developing countries

    • Not increased economic growth, but has led to income inequality.

    • Increased debt in third world countries

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The Washington consensus refers to a set of neoliberal economic policies that have been implemented in many developing countries. Opponents of these reforms argue that they have allowed multinational corporations (MNCs) to exploit workers in these countries, as labor regulations and protections are often weakened. Additionally, they claim that the reforms have not led to significant economic growth, but instead have exacerbated income inequality. Lastly, the implementation of these policies has often resulted in increased debt burdens for third world countries. Therefore, the correct answer is "All of the above."

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  • 39. 

    Which of the following countries in Latin America, is not considered to be on the "left" in regard to economic and political policies? 

    • Venezuela

    • Bolivia

    • Cuba

    • Chile

    Correct Answer
    A. Chile
    Explanation
    Chile is not considered to be on the "left" in regard to economic and political policies in Latin America. Unlike Venezuela, Bolivia, and Cuba, Chile has adopted more market-oriented economic policies and has been known for its free-market reforms. It has also pursued a more centrist approach to politics, with a history of democratic governance and a commitment to free trade.

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  • 40. 

    In order to avoid over-dependence on a limited range on primary commodities, countries must pursue a policy of: 

    • ISI

    • Export led growth

    • Diversification

    • All of the above

    Correct Answer
    A. Diversification
    Explanation
    Diversification refers to the strategy of expanding and varying the range of products and industries within a country's economy. By doing so, countries can reduce their reliance on a limited range of primary commodities and minimize the risks associated with fluctuations in commodity prices. This strategy allows for the development of multiple sectors, which can lead to increased economic stability and growth. Therefore, pursuing a policy of diversification is essential in order to avoid over-dependence on a limited range of primary commodities.

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  • 41. 

    If consumers are aware of the harsh and unfair conditions facing farmers, (in developing countries)  they may be willing to buy from producers who pay a ___________ price to the farmers

    • High

    • Low

    • Fair

    • Reasonable

    Correct Answer
    A. Fair
    Explanation
    If consumers are aware of the harsh and unfair conditions facing farmers in developing countries, they may be willing to buy from producers who pay a fair price to the farmers. This suggests that consumers understand the importance of supporting farmers by paying them a price that is just and equitable. By choosing to buy from producers who offer a fair price, consumers are actively contributing to improving the conditions for farmers in developing countries.

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  • 42. 

    What is the FLO?

    • Freetrade Labelling Organization

    • Fairtrade Labelling Organization

    • Farmtrade Labelling Organization

    • None of the above

    Correct Answer
    A. Fairtrade Labelling Organization
    Explanation
    The correct answer is Fairtrade Labelling Organization. The Fairtrade Labelling Organization (FLO) is an international non-profit organization that sets standards for fair trade products and certifies producers who meet those standards. They work to ensure fair prices and better working conditions for farmers and workers in developing countries. FLO also promotes sustainable farming practices and supports community development projects.

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  • 43. 

    When was fairtrade labelling first used? 

    • In 1988 in the Netherlands, with coffee from Mexico

    • In 1988 in the US with coffee from Colombia

    • In 1998 in the Netherlands with coffee from Mexico.

    • None of the above.

    Correct Answer
    A. In 1988 in the Netherlands, with coffee from Mexico
    Explanation
    In 1988, fairtrade labelling was first used in the Netherlands with coffee from Mexico. This means that the practice of labeling products as fairtrade, indicating that they were produced under fair working conditions and that farmers were paid a fair price, began in the Netherlands in 1988 with coffee from Mexico.

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  • 44. 

    If products meets standards set by the FLO, they will be eligible for the International Fair Trade _____________ Mark

    • Logo

    • Recognition

    • Certification

    • Standard

    Correct Answer
    A. Certification
    Explanation
    If products meet the standards set by the FLO (Fairtrade Labelling Organizations International), they will be eligible for the International Fair Trade Certification Mark. This mark serves as a symbol or indication that the products have been certified as meeting the specific criteria and requirements of fair trade practices. It provides assurance to consumers that the products they are purchasing have been produced and traded in a fair and ethical manner, benefiting producers in developing countries.

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  • 45. 

    The FLO regularly inspects and certifies around 500 producer organizations in more than _________ countries in Africa, Asia and Latin America.

    • 100

    • 200

    • 50

    • 20

    Correct Answer
    A. 50
    Explanation
    The FLO regularly inspects and certifies around 500 producer organizations in more than 50 countries in Africa, Asia, and Latin America. This suggests that the FLO has a wide reach and operates in multiple regions across the world. The certification process ensures that these producer organizations meet certain standards and criteria set by the FLO.

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  • 46. 

    A condition for the FLO certification mark is:

    • There must be few intermediaries

    • There should be many intermediaries to ensure quality control

    • The supplier of the product must receive the market price

    • None of the above.

    Correct Answer
    A. There must be few intermediaries
    Explanation
    The correct answer is "There must be few intermediaries." This means that in order for a product to be certified with the FLO certification mark, there should be a limited number of intermediaries involved in the supply chain. This requirement ensures that the product maintains its quality and integrity throughout the production and distribution process. Having fewer intermediaries also helps to reduce costs and increase transparency in the supply chain.

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  • 47. 

    The fair trading minimum price covers: 

    • Production costs

    • Provides a living income for producers

    • Sustainable production

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The fair trading minimum price covers all of the above. This means that it includes the production costs, provides a living income for producers, and promotes sustainable production. This ensures that the producers are able to cover their expenses, earn a fair income, and engage in environmentally responsible practices.

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  • 48. 

    If the product is certified as organic, the FLO will: 

    • Pay market prices

    • Pay the producer a premium

    • Not allow the product to be sold below production costs.

    • None of the above

    Correct Answer
    A. Pay the producer a premium
    Explanation
    If the product is certified as organic, the Fairtrade Labelling Organizations International (FLO) will pay the producer a premium. This means that the producer will receive an additional amount of money on top of the market price for their organic product. The premium is intended to support the producer and provide them with a fair income for their organic farming practices.

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  • 49. 

    With the Fair Trade system, the producer has access to credit from the trader of up to ________ of the purchase price.

    • 50%

    • 40%

    • 60%

    • 90%

    Correct Answer
    A. 60%
    Explanation
    In the Fair Trade system, the producer is granted access to credit from the trader, which can be as high as 60% of the purchase price. This means that the producer can borrow up to 60% of the amount they need to pay for their goods, allowing them to have more financial flexibility and stability. This credit system helps to support and empower the producers, ensuring that they have the necessary resources to continue their work and improve their livelihoods.

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Quiz Review Timeline (Updated): Mar 21, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 06, 2014
    Quiz Created by
    Phillip27

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