chapter 10 - Chapter 10 Trade Policy in Developing...

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Chapter 10: Trade Policy in Developing Countries 1. The infant industry argument was an important theoretical basis for A. Neo-colonialist theory of international exploitation. B. Import - substituting industrialization. C. Historiography of the industrial revolution in Western Europe. D. East-Asian miracle. E. None of the above. Answer: B 2. Sophisticated theoretical arguments supporting import-substitution policies include A. Terms of trade effects. B. Scale economy arguments. C. Learning curve considerations. D. The problem of appropriability. E. None of the above. Answer: D 3. General equilibrium considerations lead to the realization that import-substituting policies have an effect of A. Discouraging exports. B. Encouraging exports. C. Encouraging an efficient use of a country's resources. D. Generating large tariff revenues for the government E. None of the above. Answer: A 4. Historically those few developing countries which have succeeded in significantly raising their per-capita income levels A. Did not accomplish this with import-substituting industrialization. B. Did accomplish this with import-substituting industrialization. C. Tended to provide heavy protection to domestic industrial sectors. D. Favored industrial to agricultural or service sectors. E. None of the above.
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Answer: A 5. Statistical evidence suggests that A. Free trade policies promote economic growth more effectively than do import substitution policies. B. Import substituting policies tend to promote effective exploitation of scale economies. C. Import substitution tends to lead to relatively low effective rates of protection. D. Import substitution is to this day the preferred growth strategy promoted by the World Bank. E. None of the above. Answer: A 6. The wage differential theory which argued that shifting resources from agriculture to manufacturing entailed positive social benefits implied that A. Free trade policies would promote competitiveness. B. Free trade policies would promote economic growth for both static and dynamic reasons. C. Protectionism was likely to lead to economic stagnation. D. Protectionism and import substitution was likely to promote economic growth. E. None of the above. Answer: D 7. The Harris-Todaro model A. Lead to a rejection of the import substitution strategy for economic development. B. Supported the protectionist strategy for economic growth. C. Implied that the free trade approach was not likely to promote economic growth. D. Both b and c E. None of the above. Answer: A
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8. The growth successes of the high performance Asian economies A. Supports the belief that economic development requires import substitution policies. B. Rejects the belief that export-oriented industrialization is likely to promote economic development. C.
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This note was uploaded on 01/20/2010 for the course BUSINESS A FNC 402 taught by Professor Salaarfarooq during the Summer '09 term at Lahore School of Economics.

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chapter 10 - Chapter 10 Trade Policy in Developing...

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