Chapter 13: International Monetary
History of International Monetary
Systems: The Gold Standard: 18801914
Mint parity price
Fixed exchange rate system
$1 = .10 ounces of gold
1 = .30 ounces of gold
Exchange rate: 1 = $3
ECON 340 Homework #1 Master ($15,000)
1. Provide two factors which led to the rise of globalization in the period following World
War II (1939-45)? ($1,000)
Answer: any of the following two factors are fine.
(i) Reduction in trade barriers, (ii) greater e
Net ID: kaitongyou
1. You are given the following information:
The world price of computers is $10,000
The value of imported components is $1,000
Tariff on imported computers is 20%.
(a) What is the nominal rate of protection? ($500)
Sample Exam Answers
(1) Globalization is most accurately defined as:
A) a process of interaction and integration among people, firms, and governments of
different nations, driven by international trade and investment and aided by
Homework 3 Master ($20,000)
1. Assume country A is in Autarky. Using the diagram below, calculate the consumer
surplus, producer surplus and total surplus. Show workings! ($500 for each part or $1,500)
Chapter 4 TPS 2 ($8,000)
Each part is worth $2,000 x 4 = $8,000.
Award $2,000 per part if correct; $1,000 (half correct) or $500 (totally wrong)
Australia is L abundant; Belgium is K abundant.
Agriculture production is L intensive & car productio
ECON 340 Sample Exam
1. If Canada imposes a tariff on coffee and if no coffee is grown in Canada, this tariff:
has only protective effects.
has no revenue effects.
would be considered a pure revenue tariff.
all of the above are correct.
Chapter 2 TPS 1 ($4,000)
Assume the price of chemicals (Pc) is $4, the price of textiles (Pt) is $5 & total wealth is $300.
Use the graph below to answer the following questions. Each part is worth $1,000.
A) What are the intercepts? Ill
1. The balance of trade records:
A) trade in financial assets.
B) the current account plus long-term capital.
C) the value of merchandise exports minus imports.
D) short-term capital plus the basic balance.
2. You are given the following infor
Homework #5 Master ($20,000)
1. You are given the following information about an economy:
Investment income receipts
Investment income payments
Unilateral transfers (assume this is
Chapter 1 TPS 1 ($2,000)
Question: Brad Paisley sings about globalization in American Saturday Night. Provide 4
examples from the song. Any of the following are fine:
Brazilian boots, German cars, Canadian bacon, Italian ice cream & Mexican/Dutch
Chapter 7 TPS 1 ($8,000)
Question: In the move from free trade to quota, calculate the CHANGE in CS, PS, quota rent &
the CHANGE in total surplus (show workings)
$2,000 for CS if correct ($500 or $1,000 if incorrect)
$2,000 for PS
$2,000 for Quot
Participation Homework # 2 ($17,000): Due Wednesday February 8th, by 11.45
Directions: All homework must be typed.
Please type your answers in a new document. Include your full name and Net
ID (Uni of Arizona email address) at the top.
Homework that i
Chapter 7: Nontariff Barriers &
Arguments for Protection
Non-Tariff Barriers (NTBs)
Tariff Rate Quotas
Voluntary Export Restraints (VERs)
We will focus on a small country case.
Health and safety standa
Chapter 1: Globalization &
What is Globalization?
The growing interaction and integration among
people, firms, and governments, driven
by international trade and investment
and aided by information technology
Requires human cooperation
Chapter 8: Commercial Policy
History & Practice
US Commercial Policy
The US Constitution gives the authority to
make commercial policy to the Congress.
The Congress passed a series of bills since
Since 1930, most trade bills delegated this
International Economics &
Volume 1, Issue 1
ECON 340: International Economics & Policy
So You Want to Be a
Its easy, here is your chance.
University of Arizona
By signing up for this
Participation Homework # 2 ($14,000): Due Tuesday, September 13th by
Directions: All homework must be typed. Please type your answers in a new
Include your full name and Net ID (Uni of Arizona email address) at the start
of your file.
Chapter 14: Exchange Rates in the
Foreign Exchange Rate Quotes
Exchange rates can be quoted for two possible
Immediate settlement (actually 1 or 2
Settlement at some date in the future: the
Examples of Spot a
Chapter 12: The Foreign Exchange
Exchange rate (XR): The price of foreign
Helps determine the value of a product priced
in a different currency.
Foreign exchange market
The most important center:
Daily trade of $
Chapter 2: Autarky
Model: An abstract representation of reality
Assumptions: the set of circumstances under
which the predictions of a model are valid
Why do we make assumptions?
A map as a model.
Positive vs. Normative Analy
Chapter 6: Tariffs
Commercial policy: Government policies
trying to influence trade flows
1. _ tax imposed on imports or exports
2. Quotas limit on the quantity or value of an
3. _ a government payment to an
Chapter 15: Exchange Rates in the
Long Run: Purchasing Power Parity
Prices and Exchange Rates
The linkage between prices and exchange
The law of one price
The absolute purchasing power parity
The relative purchasing power parity
The Law of One Pri
Chapter 4: The HeckscherOhlin (Neoclassical Model)
Differences in Autarky Prices
Relative price = opportunity cost = slope of the
PPF in equilibrium
Opportunity costs differ due to
Differences in tastes
Differences in technology
Differences in resour
Chapter 11: The Balance of
The Balance of Payments
The balance of payments: records of a
countrys trade in goods, services, and
financial assets with the rest of the world.
_ : what we receive
Any imports (
Debits recorded as
Chapter 6 TPS 1 ($8,000)
You are given the following information about apples:
Price computer (free trade): $5
Domestic production (free trade): 60
Domestic production (after tariff): 70
Domestic consumption (free trade): 120