The disappointment with import-substitution policies is in part because A) of the rapid and continuous growth record of South American countries. B) many countries pursuing this strategy experienced stagnation in their growth. C) this policy is inconsistent with sophisticated economic growth models. D) this policy tended to create world-class industrial competitors. E) of the financial […]
Interindustry trade refers to A) international trade of products made within the same industry. B) domestic trade of products made within the same industry. C) international trade of products made across different industries. D) the exchange of similar items that are differentiated. E) None of the above. ANSWER C
The Heckscher-Ohlin model basically states that countries will specialize and trade those goods in which they have comparative advantage. Indicate whether the statement is true or false ANSWER FALSE
If two countries engage in Free Trade following the principles of comparative advantage, then A) neither relative prices nor relative marginal costs (marginal rates of transformation-MRTs) in one country will equal those in the other country. B) both relative prices and MRTs will become equal in both countries. C) relative prices but not MRTs will […]
Latin America A) is significantly smaller than the NAFTA market in terms of population. B) has a smaller population, but a larger GDP than the NAFTA market. C) has a larger population than the NAFTA market. D) is similar in population to the NAFTA market. ANSWER C
Many economists argue that the sharp reduction in U.S. net exports in the mid 1980s was due to A) expansionary U.S. monetary policy. B) contractionary U.S. monetary policy. C) expansionary U.S. fiscal policy. D) contractionary U.S. fiscal policy. ANSWER C
The invocation of beggar-thy-neighbor arguments with respect to industrial policies A) strengthens the argument for subsidies. B) makes sense if the international Keynesian multipliers exceed unity. C) applies only to rich countries most of whose trade partners are very poor countries. D) weakens the argument for subsidies. E) does not apply to rich countries who […]
Brazil’s export record in 1999 illustrated the principle that A) a large country will tend to have few exports. B) a small country will tend to have a high export ratio. C) protectionist policies tend to discourage exports. D) export-promoting policies do not tend to work. E) import substitution policies helped the Brazilian economy. […]
According to your text, what is the major long-run issue facing the European Union? What will be an ideal response? ANSWER An aging population
When a country’s currency depreciates A) foreigners find that its exports are more expensive, and domestic residents find that imports from abroad are more expensive. B) foreigners find that its exports are more expensive, and domestic residents find that imports from abroad are cheaper. C) foreigners find that its exports are cheaper; however, domestic residents […]
