Exam1Fall2007ANSWERS - Name: _ (Last name, first name) SID:...

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Fall 2007 1/11 Name: _________________________ (Last name, first name) SID: _________________________ UGBA 118 International Trade Professor Steven Wood Fall 2007 Exam #1 ANSWERS Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test until after 2:00 p.m. on October 18, 2007. ______________________ Signature Any test turned in without a signature indicating that you have taken this oath will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: 1. Completely , clearly and accurately label all axis, lines, curves, and equilibrium points. 2. The original diagram and equilibrium points MUST be drawn in black or pencil. 3. The first shift of any line(s) and the new equilibrium points MUST be drawn in red. 4. The second shift of any line(s) and new equilibrium points MUST be drawn in blue Do NOT open this test until instructed to do so. Good Luck!
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Fall 2007 3/11 A. Multiple Choice Questions . Circle the letter corresponding to the best answer (4 points each; total of 40 points.) 1. The gravity model offers a logical explanation for the fact that: a. Trade between Asia and the U.S. has growth faster than NAFTA trade. b. Trade in services has grown faster than trade in goods. c. Trade in manufactured goods has grown faster than trade in agricultural products. d. Intra-European trade exceeds the international trade of the European Union. e. None of the above. 2. 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 and/or value of their traded goods. c. Their historical and/or colonial ties. d. The distance between them. e. The variety of goods and services produced in each country. 3. If a very small country trades with a very large country according to the Ricardian model, then: a. The small country will suffer a decrease in economic welfare. b. The large country will suffer a decrease in economic welfare. c. Only the small country will enjoy gains from trade. d. Only the large country will enjoy gains from trade. e. Both the large and small country will enjoy gains from trade. 4. In antiquity, China exported silk because no other country knew how to produce silk. From this information, we know that: a. China enjoyed a comparative advantage in silk. b. China enjoyed an absolute advantage but not a comparative advantage in silk. c. There was no comparative advantage because technology was not diffused. d. China should export silk even though it has no comparative advantage. e.
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This note was uploaded on 07/31/2009 for the course ECON 181 taught by Professor Kasa during the Spring '07 term at University of California, Berkeley.

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Exam1Fall2007ANSWERS - Name: _ (Last name, first name) SID:...

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