Economics MCQs

Page No. 388

Developing countries that concentrate production in agricultural products or raw materials may face a long-run decline in their international terms of trade because of ?


ainelastic demand for these products in advanced countries


b large increases in the supplies of these products on world markets because of export expansion policies


csluggish demand for these products in advanced countries


d. All of the above


View Answer . All of the above

An export quota agreement to stabilize the price of bauxite tends to be more successful when the member producer countries as a percentage of the world’s producer countries is __________ and the _________ it is for the member producer countries to store/stock pile bauxite?


a relatively small; more difficult


brelatively small; easier


crelatively large; more difficult


drelatively large; easier



Suppose that the demand curve for tin is highly inelastic. If the supply curve of tin decrease and increase cyclically along the demand curve for tin then in this market the size of the price fluctuation will be __________ the size of the quantity fluctuations?


a relatively greater then


b relatively less than


c the same as


d any of the above



In the Px = export price index, Pm = import price index, Qx = export quantity index,and Qm = import quantity index. Developing countries tend to maintain that their commodity term of trade have declined over the long run suggesting that _________ has declined?


aPx/Pm


bPm/Px


c(Pm/Px)Qm


d(Px/Pm)Qx


View Answer Px/Pm

_________ policies attempt to foster industrialization by establishing high barriers to imports of foreign goods to promote local production ?


aabsolute advantage


bcomparative advantage


c export-led growth


dimport substitution


View Answer import substitution

Export-led growth strategies tend to emphasize ?


a resource allocation based on the principle of absolute advantage


b resource allocation based on the principle of comparative advantage


c. trade protection for import-competing firms


dtrade protection for exporting-competing firms



Import substitution is an example of ?


athe principle of comparative advantage


b the principle of absolute advantage


can outward-looking growth strategy


d an inward-looking growth strategy



Because supply and demand conditions for primary products are very price inelastic their prices ?


a have been steadily rising in recent decades


bhave been more stable than the prices of manufactured goods


c fluctuate about as much as the prices of manufactured goods


dtend to be very unstable from year to year



Which of the following strategies have developing countries not used to deal with the problem of unstable export markets ?


amultilateral contracts


b production and export controls


cbuffer stock arrangements


dtariff-rates quotas


View Answer tariff-rates quotas

The ability of the Organization of Petroleum Exporting Countries (OPEC) to maximize profits is hampered by ?


a a lack of substitutes for oil


b similar cost schedules for member countries


chighly inelastic world demand curve for oil


deconomic recession for oil importing nations



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