11. Rostow\'s Stages of Growth model predicts that: a. for an economic \"take-of
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11. Rostow's Stages of Growth model predicts that: a. for an economic "take-off," savings and b. financial institutions will only begin to appear . economic growth accelerates once countries have passed t d. ALL of the above are predicted by this model e. NONE of the above are predicted by this model investment must grow to 30 percent or more of GDP ff" has started by other means once the "take-o hrough the "drive-to-maturity" stage 12. Adam Smith's model of growth and development is a. Enhancing comparative advantage through trade b. Using market power to obtain better terms of trade c. Industrialization starting with infant industries policies d. Increasing labor specialization through trade e. ALL of the above BALANCE OF PAYMENTS 13. On the Mexican balance of payments, positive (t) signs are recorded for all transactions in which: b. c. d. e. Consumer products are brought in to Mexico (e.g, imports) Capital is sent out of Mexico Mexico's central bank sells official reserve assets (in part III) ALL of the above are correct NONE of the above are correct 14. Suppose U.S. banks earn S10 million of interest and fees from Mexican borrowers. At the same time, Mexico receives foreign direct investments from U.S. companies worth $50 million. As a result of these simultaneous transactions, how would Mexico's balance of payments be affected in the immediate accounting period? a. Its current account (1) balance would decrease by sio million b. Its current account (I) balance would increase (+) by $40 million c. Its capital account (II) balance would increase (+) by $40 million d. Its official settlements balance would increase (+) by $50 million 5. Suppose that due to a fiscal stimulus the real GDP in Argentina grows substantially faster than Brazil ajor trading partner. Assuming all else constant, we would predict that because of this rapid growth: a. Argentina's central bank could raise interest rates to maintain balance of payments equilibriur b. Argentina could lose official reserve assets if its currency value is fixed or pegged. c. Argentina's current account balance will become more negative d. Argentina's growth rate is unsustainable unless it attracts large capital inflows. e. ALL of the above are correct predictions. In the article we read for this class, Mamadou Dia argues that: a. Models that use cultural variables to explain Africa's economic growth are a form of subtle b. "Dummy variables" can be used to explain Africa's poor economic growth compared to c. Understanding and integrating Africa's existing cultural modes could aid development p d. ALL of the above are argued in Dia's article areas ONE ofthe ahove are argued in Dia's articleExplanation / Answer
1. The rostow's stages of economy growth predict that economic growth accelerates once the countries have passed through the drive to maturity stage. The five stages are Traditional society, Preconditions for take-off, Take-off, Drive to maturity, Age of high mass consumption.
2. Adam smith model of economic growth and development is based on all of the above. Adam Smith's theory is based on the principle of 'Laissez-Faire' which requires that state should not impose any restriction on freedom of an individual. The theory of economic development rests on the pillars of saving, division of labour and wide extent of market.
3. The +ve sign indicates that Mexican central bank sell official reserve assets.
4. The capital account balance would increase by + $ 40 million.
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