Comparative Advantage
e. all of the above
_____26. What recent trends have we seen in sources of economic aid for developing countries?
a. A decrease in FDI to the BEMs, while FDI to other developing countries continues to grow
b. Higher commodity prices make it easier for many developing countries to repay their debts
c. Large increases in real foreign aid (as a % of GNP), due to the Mexican and Asian financial bail-outs
d. A decline in capital market flows, partially as a result of the worldwide recession
e. all of the above
_____ 27. Many developing countries consistently run a Balance of Payments deficit because
a. they typically run a balance on capital surplus that is smaller than their balance on trade deficit
b. they typically run a balance on trade surplus that is smaller than their balance on capital deficit
c. import substitution policies have reduced exports and restrictions on foreign investment have created a deficit in the capital account
d. many developing governments continually undervalue their own currencies
e. None of the above. Developing countries typically run BOP surpluses.
_____ 28. Dangers of capital inflows into a developing country include all of the following except
a. these inflows create difficulties for governments that already have weak monetary policy management skills
b. capital inflows make it difficult to control inflation in economies that are short of cash flow
c. capital inflows make it more difficult to control exchange rates when domestic currencies are already weak
d. none of the above. All of these are legitimate problems associated with capital inflows
_____ 29. Surveillance (in the context of international development) refers to
a. narcotics agents monitoring drug flows from the US to Columbia
b. the role of the IMF to monitor the world’s economy and take appropriate action if needed
c. regulating private sector investment in sweat shop manufacturing facilities
d. monitoring corrupt dictatorships in foreign countries
_____ 30. Mayur and Daviss, in their paper “How NOT to Develop an Emerging Nation”, argued that
a. despite their good intentions, the developed world should leave the developing world alone and let them find their own path to [next page]