Ch 7 and 14 - Development Through Trade

Question 1

Rent seeking

Answer 1

Efforts by private actors to convince politicians to enact policies that create rents (a higher-than-normal return on investments) they can capture

Question 2

Export oriented strategy

Answer 2

Emphasis on producing manufactured goods that can be sold in the international markets

Question 3

Brady plan

Answer 3

An attempt to bring the developing country debt crisis to a close - encouraging commercial banks to negotiate debt reduction agreements with debtor governments

Question 4

Debt-service capacity

Answer 4

The ability of country to make payments of interest and principal on foreign debt

Question 5

Foreign aid

Answer 5

Financial assistance provided to developing countries’ governments by core countries and by multilateral financial institutions in order to finance development projects

Question 6

Heterodox strategies

Answer 6

Attempts to reduce inflation through government controls on wages, rather than by restricting aggregate demand.

Question 7

Liquidity problem

Answer 7

When a financial institution or other actor is solvent (assets > liabilities) but cannot readily trade its assets for the cash required to settle a liability

Question 8

Macroeconomic stabilization

Answer 8

The correction of macroeconomic imbalances that are producing high and rising inflations

Question 9

Petrodollars

Answer 9

Revenues earned by OPEC governments in the wake of the 1973 oil price rise