E452exs3F10

E452exs3F10 - Name FINAL EXAM Economics 452 International...

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N a m e FINAL EXAM Economics 452 International Trade Theory and Policy Fall 2010 1 FOREIGN DIRECT INVESTMENT 1-4 A Japanese firm is deciding how to serve the U.S. market for SUVs. 1. Desire to avoid tariffs on U.S. imports of luxury SUVs would be a) an ownership advantage b) a location advantage c) an internalization advantage d) an international advantage e) none of the above 2. Lower production costs in the United States than Japan would be a) an ownership advantage b) a location advantage c) an internalization advantage d) an international advantage e) none of the above 3. That for the same cost of production, the Japanese firm knows how to produce a higher quality SUV than U.S. firms do would be a) an ownership advantage b) a location advantage c) an internalization advantage d) an international advantage e) none of the above 4. If the Japanese firm has an ownership advantage and a location advantage but not sure if there is an internalization advantage, which ways of serving the U.S. market remain as possible choices? a) Let U.S. firms sell SUVs in the U.S. market. b) Produce in Japan and export the SUVs to the United States. c) Sign a contract with a U.S. firm licensing them to make SUVs d) Build or buy a plant in the United States run by a subsidiary e) c) or d)
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2 INTERPTEMPORAL TRADE 5-8 When face the same interest rate, the United States consumes more currently relative to the future compared to the ROW, and the United States produces less currently relative to the future than the ROW. 5. In September 2010, the United States ran a trade deficit in goods and services of $44 billion. In what sense must intertemporal trade be balanced? A country a) cannot import more cloth than the value of its food exports. b) must consume less than produce in the future if currently consume less than produce in value c) can consume more than produce in the future if currently consume more than produce in value d) cannot borrow more than will be able to repay later e) all of the above except a) 6. In an intertemporal budget constraint, the relative price of current to CF future, P / P , is a) the interest rate r b) 1 + r c) 1 / r d) 1 / (1 + r ) e) equal to the relative price of cloth to food 7. The pattern of intertemporal trade will be that the a) United States borrows from the ROW b) ROW borrows from the United States c) United States lends to the ROW d) ROW lends to the United States e) a) and d) 8. Who gains from intertemporal trade? a) The ROW b) The United States c) Both the United States and the ROW d) Neither the United States nor the ROW e) Only lenders in the United States and borrowers in the ROW
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3 TRADE POLICIES 9-12 The United States imposes a binding quota on imports of textiles from China.
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E452exs3F10 - Name FINAL EXAM Economics 452 International...

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