Question

1- Why would a large country be better off favoring import-substitution industries instead of export industries?

A- Increased production in import-substitution industries takes factors of production away from export industries, which effectively allows only the strongest industries to survive.

B- Increased production in import-substitution industries increases the country's exports, which allows an improvement in the country's terms of trade.

C- Increased production in import-substitution industries results in an increase in supply of the imported product, which results in a higher price for the imported product, and increased imports result in increased exports.

D- Increased production in import-substitution industries results in a decrease in the demand for the imported product, which results in a decrease in the price the country pays for the imported product, but increased production in export industries results in an increase in the supply of the exported product, which decreases the price that the country can charge for the exported product.

2- If a large country's growth increases the country's willingness to trade, the price of the imported goods can change. In that case, the country experiences:

A- a decline in its terms of trade.

B- multiple positive consequences.

C- an improvement in its terms of trade.

D- an increase in the price of the goods that it exports.

3- Why would a large country be better off favoring import-substitution industries instead of export industries?

A- Increased production in import-substitution industries takes factors of production away from export industries, which effectively allows only the strongest industries to survive.

B- Increased production in import-substitution industries increases the country's exports, which allows an improvement in the country's terms of trade.

C- Increased production in import-substitution industries results in an increase in supply of the imported product, which results in a higher price for the imported product, and increased imports result in increased exports.

D- Increased production in import-substitution industries results in a decrease in the demand for the imported product, which results in a decrease in the price the country pays for the imported product, but increased production in export industries results in an increase in the supply of the exported product, which decreases the price that the country can charge for the exported product.

4- A large country that expands its ability to produce an import-competing good benefits in two ways. First, the country benefits from improved production, and second:

A- by decreasing its demand for the imported product, it reduces the price of that product.

B- it benefits by increasing the variety of products that it imports.

C- it can demand a higher price for its exports.

D- it increases the amounts of its exports and gains greater influence over prices.

Answer 1

1- Why would a large country be better off favoring import-substitution industries instead of export industries?

B- Increased production in import-substitution industries increases the country's exports, which allows an improvement in the country's terms of trade.

as import substitution reduces the demand for imported goods which decreases imports and the ratio of export and import improves which makes terms of trade favorable.

2- If a large country's growth increases the country's willingness to trade, the price of the imported goods can change. In that case, the country experiences:

A- a decline in its terms of trade.

because increased willingness for trade will increase the imports more than the exports so the import prices will be higher than the export prices.

3- 1st and 3rd question same

4- A large country that expands its ability to produce an import-competing good benefits in two ways. First, the country benefits from improved production, and second:

A- by decreasing its demand for the imported product, it reduces the price of that product.