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testbank6

CHAPTER7

TRADEPOLICIESFORTHEDEVELOPINGNATIONS

MULTIPLE-CHOICEQUESTIONS

1.Whichofthefollowingisnotamajorfactorthatencouragesdevelopingnationstoforminternationalcommodityagreements?

a.Inelasticcommoditysupplyschedules

b.Inelasticcommoditydemandschedules

c.Exportmarketsthattendtobeunstable

d.Secularincreasesintheirtermsoftrade

2.Internationalcommodityagreementsdonot:

a.Consistofconsumingandproducingnationswhodesiremarketstability

b.Levyexportcutbackssoastooffsetrisingcommodityprices

c.Utilizebufferstockstogeneratecommoditypricestability

d.Increasethesupplyofcommoditiestopreventrisingprices

3.Concerningthepriceelasticitiesofsupplyanddemandforcommodities,empiricalestimatessuggestthatmostcommoditieshave:

a.Inelasticsupplyschedulesandinelasticdemandschedules

b.Inelasticsupplyschedulesandelasticdemandschedules

c.Elasticsupplyschedulesandinelasticdemandschedules

d.Elasticsupplyschedulesandelasticdemandschedules

4.Ifthedemandscheduleforbauxiteisrelativelyinelastictopricechanges,anincreaseinthesupplyscheduleofbauxitewillcausea（n）:

a.Decreaseinpriceandadecreaseinsalesrevenue

b.Decreaseinpriceandanincreaseinsalesrevenue

c.Increaseinpriceandadecreaseinsalesrevenue

d.Increaseinpriceandanincreaseinsalesrevenue

5.Aprimarygoalofinternationalcommodityagreementshasbeenthe:

a.Maximizationofmembers’revenuesviaexporttaxes

b.Nationalizationofcorporationsoperatinginmembernations

c.Adoptionoftariffprotectionagainstindustrializednationsellers

d.Moderationofcommoditypricefluctuationswhenmarketsareunstable

6.WhichdevicehastheInternationalTinAgreementutilizedasawayofstabilizingtinprices?

a.Multilateralcontracts

b.Exportsubsidies

c.Bufferstocks

d.Exporttariffs

7.Whichmethodhasnotgenerallybeenusedbytheinternationalcommodityagreementstostabilizecommodityprices?

a.Productionquotasappliedtothelevelofcommodityoutput

b.Bufferstockarrangementsamongproducingnations

c.Exportrestrictionsappliedtointernationalsalesofcommodities

d.Measurestonationalizeforeign-ownedproductionoperations

8.TheOPECnationsduringthe1970smanifestedtheirmarketpowerbyutilizing:

a.Exporttariffsleviedforrevenuepurposes

b.Exporttariffsleviedforprotectivepurposes

c.Importtariffsleviedforprotectivepurposes

d.Importtariffsleviedforrevenuepurposes

9.Onefactorthathaspreventedtheformationofcartelsforproducersofcommoditiesisthat:

a.Thedemandforcommoditiestendstobepriceinelastic

b.Substituteproductsexistformanycommodities

c.Commodityproduceshavebeenabletodominateworldmarkets

d.Productionofmostcommoditiesiscapitalintensive

10.WhichdevicehasbeenusedbytheInternationalWheatAgreementtostipulatetheminimumpricesatwhichimporterswillbuystipulatedquantitiesfromproducersandthemaximumpricesatwhichproducerswillsellstipulatedquantitiestoimporters?

a.Bufferstocks

b.Exportcontrols

c.Multilateralcontracts

d.Productioncontrols

11.Ifthebauxiteexportingcountriesformacarteltoboostthepriceofbauxitesoastoincreasesalesrevenue,theybelievethatthedemandforbauxite:

a.Isinelasticwithrespecttopricechanges

b.Iselasticwithrespecttopricechanges

c.Willincreaseinresponsetoapriceincrease

d.Willnotchangeinresponsetoapricechange

12.Ifthesupplyschedulefortinisrelativelyinelastictopricechanges,adecreaseinthedemandschedulefortinwillcausea（n）:

a.Decreaseinpriceandanincreaseinsalesrevenue

b.Decreaseinpriceandadecreaseinsalesrevenue

c.Increaseinpriceandanincreaseinsalesrevenue

d.Increaseinpriceandadecreaseinsalesrevenue

13.Whichofthefollowingcouldpartiallyexplainwhythetermsoftradeofdevelopingcountriesmightdeteriorateovertime?

a.Developing-countryexportsmainlyconsistofmanufacturedgoods

b.Developing-countryimportsmainlyconsistofprimaryproducts

c.Commodityexportpricesaredeterminedinhighlycompetitivemarkets

d.Commodityexportpricesaresolelydeterminedbydevelopingcountries

14.Whichterms-of-tradeconceptemphasizesanation’scapacitytoimport?

a.Incometermsoftrade

b.Commoditytermsoftrade

c.Bartertermsoftrade

d.Pricetermsoftrade

15.Whichtradestrategyhavedevelopingcountriesusedtorestrictimportsofmanufacturedgoodssothatthedomesticmarketispreservedforhomeproducers,whothuscantakeovermarketsalreadyestablishedinthecountry?

a.Internationalcommodityagreement

b.Exportpromotion

c.Multilateralcontract

d.Importsubstitution

16.Whichtradestrategyhavedevelopingcountriesusedtoreplacecommodityexportswithexportssuchasprocessedprimaryproducts,semi-manufacturers,andmanufacturers?

a.Multilateralcontract

b.Bufferstock

c.Exportpromotion

d.Exportquota

17.Tohelpdevelopingcountriesexpandtheirindustrialbase,someindustrialcountrieshavereducedtariffsondesignatedmanufacturedimportsfromdevelopingcountriesbelowthelevelsappliedtoimportsfromindustrialcountries.Thisschemeisreferredtoas:

a.Generalizedsystemofpreferences

b.Export-ledgrowth

c.Internationalcommodityagreement

d.Reciprocaltradeagreement

18.WhichnationaccountsforthelargestamountofOPEC’soilreservesandproduction?

a.Iran

b.Libya

c.Iraq

d.SaudiArabia

19.Assumingidenticalcostanddemandcurves,OPECasacartel—incomparisontoacompetitiveindustry—willproduce:

a.Greateroutputandchargealowerprice

b.Greateroutputandchargeahigherprice

c.Lessoutputandchargeahigherprice

d.Lessoutputandchargealowerprice

20.Whichofthefollowingsituationsreducesthelikelihoodofsuccessfuloperationofacartel?

a.Cartelsalesexperiencearapidexpansion

b.Thedemandforcarteloutputispriceinelastic

c.Thenumberoffirmsinthecartelislarge

d.Itisverydifficultfornewfirmstoenterthemarket

21.Whichindustrializationpolicyusedbydevelopingcountriesplacesemphasisonthecomparativeadvantageprincipleasaguidetoresourceallocation?

a.Exportpromotion

b.Importsubstitution

c.Internationalcommodityagreements

d.Multilateralcontract

22.Awidelyusedindicatortodifferentiatedevelopedcountriesfromdevelopingcountriesis:

a.Internationaltradepercapita

b.Realincomepercapita

c.Unemploymentpercapita

d.Caloriespercapita

23.Concerningthehypothesisthattherehasoccurredalong-rundeteriorationinthedevelopingcountries’termsoftrade,empiricalstudiesprovide:

a.Mixedevidencethatdoesnotsubstantiatethedeteriorationhypothesis

b.Overwhelmingsupportforthedeteriorationhypothesis

c.Overwhelmingoppositiontothedeteriorationhypothesis

d.Noneoftheabove

24.Fortheoil-importingcountries,theincreasesinoilpricesin1973–1974and1979–1980resultedinallofthefollowingexcept:

a.Balanceoftradedeficits

b.Priceinflation

c.Constrainedeconomicgrowth

d.Improvingtermsoftrade

25.HongKongandSouthKoreaareexamplesofdevelopingnationsthathaverecentlypursuedindustrializationpolicies.Thesecountriesareusing:

a.Importsubstitution

b.Exportpromotion

c.Commercialdumping

d.Multilateralcontract

26.Stabilizingcommoditypricesaroundlong-termtrendstendstobenefitimportersattheexpenseofexportersinmarketscharacterizedby:

a.Demand-sidedisturbances

b.Supply-sidedisturbances

c.Demand-sideandsupply-sidedisturbances

d.Noneoftheabove

27.Stabilizingcommoditypricesaroundlong-termtrendstendstobenefitexportersattheexpenseofimportersinmarketscharacterizedby:

a.Demand-sidedisturbances

b.Supply-sidedisturbances

c.Demand-sideandsupply-sidedisturbances

d.Noneoftheabove

28.Tobeconsideredagoodcandidateforanexportcartel,acommodityshould:

a.Beamanufacturedgood

b.Beaprimaryproduct

c.Haveahighpriceelasticityofsupply

d.Havealowpriceelasticityofdemand

29.Tobeconsideredagoodcandidateforanexportcartel,acommodityshould:

a.Beamanufacturedgood

b.Beaprimaryproduct

c.Havealowpriceelasticityofsupply

d.Haveahighpriceelasticityofdemand

30.Tohelpdevelopingnationsstrengthentheirinternationalcompetitiveness,manyindustrialnationshavegrantednonreciprocaltariffreductionstodevelopingnationsunderthe:

a.Internationalcommodityagreementsprogram

b.Multilateralcontractprogram

c.Generalizedsystemofpreferencesprogram

d.Export-ledgrowthprogram

ThediagraminFigure7.1illustratestheinternationaltinmarket.Assumethattheproducingandconsumingcountriesestablishaninternationalcommodityagreementunderwhichthetargetpriceoftinis$5perpound.AnswerQuestions31–33onthebasisofthisinformation.

Figure7.1. DefendingtheTargetPriceinFaceofChangingDemandConditions

31.ConsiderFigure7.1.SupposethedemandfortinincreasesfromD0toD1.Underabufferstocksystem,thebuffer-stockmanagercouldmaintainthetargetpriceby:

a.Selling15poundsoftin

b.Selling30poundsoftin

c.Buying15poundsoftin

d.Buying30poundsoftin

32.ConsiderFigure7.1.SupposethedemandfortindecreasesfromD0toD2.Underabufferstocksystem,thebuffer-stockmanagercouldmaintainthetargetpriceby:

a.Selling15poundsoftin

b.Selling30poundsoftin

c.Buying15poundsoftin

d.Buying30poundsoftin

33.ConsiderFigure7.1.SupposethedemandfortindecreasesfromD0toD2.Underasystemofexportquotas,thetinprod