midterm-eco161-11s-A-blue-sol

midterm-eco161-11s-A-blue-sol - #1 ISI Correct answers...

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Sheet1 Page 1 #1 ISI Correct answers include (are not limited to): -Import Tariff. Advantage: improves ToT for a large economy, protects infant industry under external economies of scale -Import Quota. Advantage: improves ToT for a large economy, protects infant industry under external economies of scale -Local Content Rule. Advantage: promotes backward linkages to local parts suppliers, encourages knowledge transfer throug h -Exchange Rate Overvaluation. Advantage: facilitates imports [1 point for baseline approach, 3 points for each correct answer] #2 Measuring Comp Adv [2 points each] -In autarky, price ratios reflect opportunity costs. Infer comparative advantage by comparing relative domestic prices to relativ e -No -Yes -Imported products (no exports from import competing industries) have BADV = 0 -No #3 Unbalanced Growth and ToT -A the point on the PPF not tangent to the trade line -X is the export good [1 point] -PPF augmented along the X axis [1 point] -ToT decline for a large economy (possible alternative answer: unchanged for a small economy) [1 point] -Pick P' at point of tangency on PPF with new trade line, trade line flatter than before (decline in ToT) [1 point] -False -False [1 point for baseline approach] #4 Distribution of Gains
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This note was uploaded on 08/14/2011 for the course ECON 161 taught by Professor Muendler during the Spring '11 term at San Diego.

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midterm-eco161-11s-A-blue-sol - #1 ISI Correct answers...

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