Interindustry trade is not based on comparative advantage since it consists of the export and import of similar goods.
Indicate whether the statement is true or false
Question 2 - The accumulation of international debt increased the debt service requirements of the indebted countries. After the debt crisis began, this caused
A) the adoption of expansionary policies to return to growth.
B) large capital inflows to service the debt.
C) the adoption of strongly contractionary policies to reduce consumption and government deficits.
D) an intensification of industrial policies targeted on import substitutes.
Question 3 - Suppose that Mexico has external debt, and the value of the country's currency, the peso, falls. Which of the following is true?
A) The peso value of the loans will decrease as well.
B) Mexico will find it easier to pay off its external debt.
C) Mexico will declare bankruptcy.
D) The cost of debt service will be higher.
Question 4 - The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was
A) raising their domestic interest rates to stabilize the collapsing currencies.
B) using their monetary and fiscal policies alone.
C) use capital controls.
D) adopting a flexible exchange rate system.
Quick Reply
