E452exs3F11

E452exs3F11 - Name FINAL EXAM Economics 452 International...

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N a m e FINAL EXAM Economics 452 International Trade Theory and Policy Fall 2011 1 STANDARD TRADE MODEL 1-4 Free trade prevails between Canada and the ROW. Suppose Canada experiences economic growth, while the ROW has no growth. Canada exports furniture and imports rugs from the ROW. 1. In world markets, the relative supply of furniture to rugs: a) rises b) falls c) stays the same d) rises, if Canada’s growth is biased toward furniture e) falls, if Canada’s growth is biased toward furniture 2. In world markets, the relative price of furniture to rugs: a) rises b) falls c) stays the same d) rises, if Canada’s growth is biased toward furniture e) falls, if Canada’s growth is biased toward furniture 3. The secondary effect of the economic growth on Canada is a terms of trade: a) improvement b) deterioration c) unchanged d) improvement, if Canada’s growth is biased toward furniture e) deterioration, if Canada’s growth is biased toward furniture 4. The secondary effect of Canada’s growth on the ROW is a terms of trade: a) improvement b) deterioration c) unchanged d) improvement, if Canada’s growth is biased toward furniture e) deterioration, if Canada’s growth is biased toward furniture
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2 INTERPTEMPORAL TRADE 5-8 Suppose the United States currently borrows from the ROW. 5. Which of the following is NOT true? a) The ROW currently consumes less than it produces in value. b) The United States currently consumes more than it produces in value. c) The ROW will be able to consume more than produces in value sometime in the future. d) The United States must produce more than consumes in value sometime in the future. e) No country can import more than export in the current period 6. In an intertemporal budget constraint, 1 + r represents the CF a) relative price of current to future, P / P FC b) relative price of future to current, P / C c) price of current consumption and production, F d) price of future consumption and production, P e) autarky level of consumption and production 7. This pattern of intertemporal trade could stem from the United States, at the same interest rate: a) consuming more current to future than the ROW b) consuming less current to future than the ROW c) producing more current to future than the ROW d) producing less current to future than the ROW e) a) and d) 8. If the real interest rate increases while under intertemporal trade, who gains and loses? a) United States and ROW gain; none lose b) United States gains and ROW loses c) ROW gains and United States loses d) United States and ROW lose; none gain e) Cannot determine based on the information provided
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3 TRADE POLICIES 9-12 Suppose the United States removes its binding quota on imports of sugar.
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This note was uploaded on 02/13/2012 for the course ECON 452 taught by Professor Vacaflores during the Fall '06 term at Texas A&M.

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E452exs3F11 - Name FINAL EXAM Economics 452 International...

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