Trade Policies For the Developing Nations – MCQs

40 questions. Click to practice.

Show Answers

Correct options are highlighted when revealed.

1.If a global recession reduces the demand for tin by 4 million pounds at every price level, what action should be taken to keep the tin price stable at its target value?

offer 4 million pounds of tin for saleoffer 8 million pounds of tin for salepurchase 4 million pounds of tinpurchase 8 million pounds of tinno action needed

2.In a perfectly competitive market, what are the long-run equilibrium price, output quantity, and total profit for the firms?

$100, 2 million barrels daily, $60 million profit$80, 4 million barrels daily, $70 million profit$60, 6 million barrels daily, $20 million profit$40, 8 million barrels daily, zero profit

3.Which institution mainly offers long-term financing to developing nations to support the construction of infrastructure like schools, hospitals, and roads?

World BankInternational Monetary FundCouncil on Foreign RelationsOrganization of the Petroleum Exporting Countries

4.Which statement best describes the economic trade policy of the People’s Republic of China in recent years?

It was the earliest East Asian nation acknowledged for effectively adopting an export-driven growth model.It continues to rely primarily on import substitution as its main strategy for economic expansion.Due to its large population, it has consistently held a major portion of global trade.In recent decades, it has notably expanded its engagement with international trade and foreign direct investment.

5.Which statement best describes the achievements of the OPEC oil cartel?

It demonstrates how simple it is for cartel members to maintain cooperation.It effectively increased oil prices in the 1970s but ceased to exist in the 1980s.It has been more profitable during worldwide economic downturns.It has successfully elevated oil prices to a degree that other developing nations find difficult to replicate with their main commodities.

6.What are the main factors that contribute to economic growth?

Expansion of the workforceGrowth in capital assetsInnovations that boost efficiencyAll of these factors combined

7.If the supply of tin is very inelastic and its demand shifts up and down repeatedly along the supply curve, how will the magnitude of changes in quantity compare to the magnitude of changes in price in this market?

8.If the global price of tin exceeds the target (ceiling) price set by an international commodity agreement, what actions would the buffer stock manager and member countries take to bring the price closer to the target? Specifically, what would the buffer stock manager do with tin, and how would member countries adjust their tin exports under an export quota agreement?

9.What benefit does the Generalized System of Preferences (GSP) program provide?

Exports from developing nations to developed countries receive reduced tariff ratesImports by developing countries from developed nations gain lower tariff chargesDeveloping countries are allowed to bypass the most-favored-nation ruleDeveloped countries can disregard the most-favored-nation principle

10.Why might developing nations that focus on exporting raw materials or agricultural products experience a long-term worsening of their international terms of trade?

Because developed countries impose relatively low tariffs on importsDue to highly responsive demand for these goods in developed marketsAs a result of decreasing availability of these goods in the global marketOwing to weak demand for these products in developed countries

11.How do tariff rates in developed nations generally compare to those in developing nations?

greater than those in developing countriesthe same as in developing countriesless than those in developing countriesno consistent trend exists

12.What type of goods make up the majority of exports from developing countries?

Raw materials like tin and bauxiteProducts used in further manufacturing processesAgricultural goods that require extensive manual laborManufactured items that rely heavily on labor

13.Which of the following statements is NOT true regarding the United States' tariff policy?

Applies reduced tariffs to products from countries with normal trade relationsGrants preferential tariff rates to nations enjoying most favored nation statusImposes minimal or no tariffs on imports from select developing countriesCharges the same tariff rates on goods imported from every country worldwide

14.Which of the following organizations and policies have been established to aid developing nations?

The World BankThe International Monetary FundThe Generalized System of PreferencesAll of the above

15.Which of the following methods has NOT been used by international commodity agreements to stabilize primary product prices?

Tariff-rate quotas imposed on imported productsRegulation of production and export levelsMaintenance of buffer stock reservesEstablishment of multilateral contractsPrice support subsidies

16.Which initiative allows industrialized countries to offer non-reciprocal tariff concessions to developing countries to boost their global trade competitiveness?

program for international commodity agreementsmultilateral trade agreement schemegeneralized system of preferences initiativeexport-driven development strategynone of the above

17.Which characteristic makes a commodity suitable for forming an effective export cartel?

Be a product that is manufacturedBe a raw material or primary commodityExhibit a high responsiveness of supply to price changesPossess a low sensitivity of demand to price variationsHave a highly competitive market structure

18.What is the term for the system that allows developing countries to export goods with reduced tariff rates compared to other nations?

standard trade relationship statusmost favored nation treatmentoffshore manufacturing rulesGeneralized System of Preferencespreferential trade agreement

19.What do empirical studies indicate regarding the hypothesis that developing countries have experienced a long-term decline in their terms of trade?

Conflicting findings that fail to confirm the long-term decline hypothesisStrong evidence fully supporting the decline hypothesisStrong evidence completely refuting the decline hypothesisNone of these options

20.Which industrialization strategy adopted by developing nations focuses on utilizing the principle of comparative advantage to direct resource distribution?

Export-led growthImport substitutionGlobal commodity agreementsMultilateral trade agreements