Exam 1 - International Trade Texas A&M University Spring...

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International Trade Exam I Texas A&M University ECON 452-500 Spring 2006 Prof: Diego Vacaflores Name: ____________________________________________________ 1. According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is (a) their cultural affinity (b) the average weight/value of their traded goods (c) their colonial—historical ties (d) the distance between them (e) the number of varieties produced on the average by their industries. 2. That Ohio’s trade with British Columbia is less than Ontario’s trade with British Columbia (each measured as a percentage of GDP) best illustrates the impact of what for trade volumes? (a) size (b) borders (c) their colonial—historical ties (d) the distance between them (e) the number of varieties produced on the average by their industries. 3. In “National Borders Matter: Canada-U.S. Regional Trade Patterns”, by J. McCallum, the following estimates are calculated ij j i ij D Y Y T ln 54 . 1 ln 03 . 1 ln 18 . 1 06 . 3 ln + + = From this, we can conclude that (a) a ten percentage point increase in distance between regions will result in a 15.4 percentage point decrease in the value of trade between the two regions. (b) an increase of one percent in region j ’s GDP will increase region i ’s GDP by 1.03 percent. (c) an increase of one percent in region j ’s GDP will decrease the value of trade between region i and region j by 1.03 percent. (d) a decrease of one percent in region i ’s GDP will decrease the value of trade between region i and region j by 1.18 percent. 4. In the gravity model, large economies import more because (a) they are close to each other (b) they have a free trade agreement (c) they produce more efficiently than small economies (d) they have a higher income (e) they have strong cultural ties
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5. Since World War II, the relative importance of raw materials, including oil, in total world trade (a) remained constant (b) increased (c) decreased (d) fluctuated widely with no clear trend (e) both (a) and (d) above
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6. According to Ricardo, a country will have a comparative advantage in the product in which its (a) labor productivity is relatively low. (b) labor productivity is relatively high.
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This note was uploaded on 03/25/2008 for the course ECON 452 taught by Professor Vacaflores during the Spring '06 term at Texas A&M.

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Exam 1 - International Trade Texas A&M University Spring...

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