Exam _2 _Fall 2008_

# Exam _2 _Fall 2008_ - Name(Last name first name SID UGBA...

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Fall 2008 1/16 Name: _________________________ (Last name, first name) SID: _________________________ UGBA 118 International Trade Professor Steven Wood Fall 2008 Exam #2 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 3:30 p.m. on December 19, 2008. _____________________________ 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 2008 3/16 A. Multiple Choice Questions . Circle the letter corresponding to the best answer (3 points each; total of 45 points.) 1. If the world terms of trade equal those of the Foreign country, then: a. Both the Home country and the Foreign country will gain from international trade. b. The Home country will gain from international trade but the Foreign country will not. c. The Foreign country will gain from international trade but the Home country will not. d. Neither the Home country nor the Foreign country will gain from international trade. 2. If Australia has more land per worker and Belgium has more capital per worker, then when free trade is opened between these two countries: a. The real income of labor in Australia would increase. b. The real income of labor in Belgium would increase. c. The real income of capital owners in Australia would increase. d. The real income of landowners in Belgium would fall. 3. Suppose that Home experiences growth strongly biased toward its export good. This will: a. Improve Home’s terms of trade. b. Worsen Home’s terms of trade. c. Worsen Foreign’s terms of trade. d. Have no effect on Foreign’s terms of trade. 4. Before international trade, an industry is characterized by external scale economies and exists in two countries. Once these two countries engage in international trade the combined market is supplied by only one country’s industry. Then: a. Consumers in the importing country would suffer higher prices and fewer varieties. b.

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Exam _2 _Fall 2008_ - Name(Last name first name SID UGBA...

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