1 Which industrialization policy used by developing countrie

1. Which industrialization policy used by developing countries places emphasis on the comparative advantage principle as a guide to resource allocation? A) international commodity agreements B) intra-industry trade practice C) Infant Industry promotion D) import substitution E) export promotion 2. The infant industry argument calls for active government involvemernt A) only if the industry is not one already dominated by industrial countries. B) only if the government forecasts are accurate. C) only if the industry has a high value added. D) only if some market failure can be identified. E) only if the industry is independently able to earn high returns. 3. In the presence of external economies of scale, trade A) will unambiguously worsens welfare in both countries B) will unambiguously worsen welfare in the exporting country and improve welfare in the importing country. C) will unambiguously improves welfare in both countries. D) will unambiguously improve welfare in the exporting country and worsen welfare in the importing country. E) may or may not improve welfare in both countries 4. Based on the environmental Kuznets curve, which countries pollutes more? A) low-income countries. B) middle-income countries. C) high-income countries. D) fast growing countries. E) pollution is not related to the level of income.

Solution

1. Ans: export promotion

Explanation:

A country should specialize in the production and export of the goods in which it has comparative advantage.

2. Ans: only if some market failure can be identified.

3. Ans: may or may not improve welfare in both countries.

4. Ans: high income countries