Trade Strategies For Economic Growth & Development

50 Questions | Total Attempts: 25

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Economic Development Quizzes & Trivia

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


Questions and Answers
  • 1. 
    When a country produces just a few major products, it may suffer from the problem of: 
    • A. 

      Interdependence

    • B. 

      Independence

    • C. 

      Over-specialization

    • D. 

      Trade diversion

  • 2. 
    If a country is dependent on a narrow range of exports, then they face great: 
    • A. 

      Vulnerability

    • B. 

      Uncertainty

    • C. 

      Fluctuations in economic growth

    • D. 

      All of the above.

  • 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
    • A. 

      OECD

    • B. 

      WTO

    • C. 

      IMF

    • D. 

      World Bank

  • 4. 
    The price elasticity of demand for commodities and the price elasticity of supply for commodities (on the world market) tend to be:
    • A. 

      Relatively elastic

    • B. 

      Very inelastic

    • C. 

      Very elastic

    • D. 

      Relatively inelastic

  • 5. 
    Any economic policy that is aimed at supporting domestic producers at the expense of foreign producers is called: 
    • A. 

      Trade diversion

    • B. 

      Trade creation

    • C. 

      Protectionism

    • D. 

      Nationalistic behavior.

  • 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. 
    • A. 

      (i) absolute (ii) foreign

    • B. 

      (i) comparative (ii) foreign

    • C. 

      (i) trade (ii) hard currency

    • D. 

      (i) comparative (ii) real.

  • 7. 
    America's cotton, dairy, and rice farmers receive billions of dollar every year in the form of:
    • A. 

      Grants

    • B. 

      Subsidies

    • C. 

      Quotas

    • D. 

      All of the above

  • 8. 
    Subsidies in the US and European Union, encourage farmers to produce more, forcing down the world
    • A. 

      Tariff

    • B. 

      Benchmark

    • C. 

      Quota

    • D. 

      Price

  • 9. 
    Due to subsidies in developed countries, small scale farmers in developing countries are effectively deprived of the ability to: 
    • A. 

      Export to developed countries

    • B. 

      Earn a living

    • C. 

      Provide for their families

    • D. 

      All of the above.

  • 10. 
    What is tariff escalation? 
    • A. 

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

    • B. 

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

    • C. 

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

    • D. 

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

  • 11. 
    Due to tariff escalation, there is little incentive for developing countries to _____________ away from producing raw materials to producing more processed goods. 
    • A. 

      Trade

    • B. 

      Manufacturer

    • C. 

      Diversify

    • D. 

      Stay

  • 12. 
    Tariff escalation is widely observed in: 
    • A. 

      Textile markets

    • B. 

      Agriculture markets

    • C. 

      Mineral-resource markets

    • D. 

      Foreign exchange markets

  • 13. 
    Another factor that prevents developing countries from gaining access to  international markets is that some have _______________ currencies. 
    • A. 

      Soft

    • B. 

      Free floating

    • C. 

      Low value

    • D. 

      Non-convertible

  • 14. 
    Economic growth is not economic ________________ but it can generate extra income for governments, firms and people that may led to ______________
    • A. 

      Progress

    • B. 

      Development

    • C. 

      Trade

    • D. 

      Opportunity

  • 15. 
    Import substitution is more formally known as import substitution _______________
    • A. 

      Trade

    • B. 

      Industrialization (ISI)

    • C. 

      Development (ISD)

    • D. 

      Programs (ISP)

  • 16. 
    When a developing country adopts a policy of ISI it will: 
    • A. 

      Produce goods domestically rather than import them.

    • B. 

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

    • C. 

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

    • D. 

      Import about the same volume of exports.

  • 17. 
    ISI is the opposite of:
    • A. 

      Comparative advantage

    • B. 

      Absolute advantage

    • C. 

      Export led growth

    • D. 

      All of the above.

  • 18. 
    Economists that believe in free trade would: 
    • A. 

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

    • B. 

      Oppose a policy of ISI

    • C. 

      Argue for a policy of export led growth

    • D. 

      Two of the above answers are correct.

  • 19. 
    Traditionally countries which adopted a policy of ISI focused on industries that were: 
    • A. 

      Labour-intensive

    • B. 

      Low-skilled manufacturing

    • C. 

      Not dependent on large investments in capital equipment.

    • D. 

      All of the above

  • 20. 
    The advantages of ISI include: 
    • A. 

      It protects local jobs

    • B. 

      It protects local cultures and social habits

    • C. 

      It protects an economy from MNCS

    • D. 

      All of the above

  • 21. 
    With a policy of ISI  a government will:
    • A. 

      Provide subsidies to domestic industries and implement tariffs against imports.

    • B. 

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

    • C. 

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

    • D. 

      None of the above.

  • 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.  
    • A. 

      Absolute advantage

    • B. 

      Comparative advantage

    • C. 

      Nationalization

    • D. 

      WTO membership

  • 23. 
    When countries implement a policy of ISI other countries may:
    • A. 

      Welcome the decision and attempt to increase trade with this country

    • B. 

      Implement similar policies, while trying to encourage more trade.

    • C. 

      Take retaliatory measures, involving more protectionist policies.

    • D. 

      Adopt the counter-argument and implement less protectionist measures.

  • 24. 
    Countries which have adopted ISI policies include: 
    • A. 

      Argentina

    • B. 

      Brazil

    • C. 

      Mexico

    • D. 

      All of the above.

  • 25. 
    Export promotion or export led growth is an ________________ oriented growth strategy.
    • A. 

      Inward

    • B. 

      Outward

    • C. 

      International

    • D. 

      None of the above.