Mock Exam 1

# Mock Exam 1 - Mock Exam I ECON 452-500 Prof Diego...

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Mock Exam I ECON 452-500 Prof: Diego Vacaflores 1. The gravity model, that states that size matters, predicts that the weight of the traded good will ________ related to its likelihood to be exported (a) be directly (b) be inversely (c) not be (d) All of the above (e) None of the above 2. Suppose that I compile the relevant data and find that Monterrey’s trade with Texas is less than Florida’s trade with Texas (each measured as a percentage of GDP). This best illustrates the impact on trade volumes of (a) the size of the two economies (States) (b) the importance of borders (c) their historical ties, as the three States were part of Mexico once. (d) the distance between them. (e) the quality of roads and availability of gas stations. 3. If Tij is the amount of trade between counties i and j, the equation that better reflects the predictions of the gravity model is: (a) T ij = AY i a Y j b D ij c (b) T ij = AY i a D ij b /Y j c (c) T ij = AY i a Y j b /D ij c (d) D ij = AY i a Y j b /T ij c (e) T ij = AY i a Y j b D ij c 4. 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 00 . 2 ln 06 . 1 ln 21 . 1 37 . 1 ln + + = From this regional analysis we can conclude that (a) a one percentage point increase in distance will result in a two 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 1.06 percent. (c) an increase of one percent in region j ’s GDP will increase the value of trade between region i and region j by 1.06 percent. (d) an decrease of one percent in region i ’s GDP will increase the value of trade between region i and region j by 1.21 percent.

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5. In the current Post-Industrial economy, international trade in services (including banking and financial services) (a) dominates world trade (b) does not exist (c) is relatively small (d) is relatively stagnant (e) None of the above 6. Trade between two countries can benefit both countries if (a) each country exports that good in which it has a comparative advantage. (b) each country enjoys superior terms of trade.
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Mock Exam 1 - Mock Exam I ECON 452-500 Prof Diego...

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