Chapter 1 & 2 Flashcards
The GATT was a) an International UN agency wide trade oversight b) international treaty governing trade c)collection of tariff standards d) IMF agency with trade oversight e) US Government agency
b) an international treaty governing trade
The international debt crisis of 1982 was precipitated when a)Mexico b)Brazil c)Malaysia d)Russia e)China could not pay its international debts.
a)Mexico
The coordination of international macroeconomic policies among sovereign nations a)has only recently been advocated by economists b)is achieved through governance of the United Nations c)is a well-established tradition d)is unnecessary in a world populated with many nations
a)has only recently been advocated by economists
International capital markets a)have grown significantly since the 1960s b)link the capital markets of individual countries c)differ in trivial ways from domestic capital markets d) all the above e)A and B only
e) A and B only
International economics can be divided into two broad subfields: a)international trade and international money b)macro and micro c)static and dynamic d)monetary and barter e)developed and less developed
a) International trade and international money
Transactions that involve the physical movement of goods or a tangible commitment of resources are the domain of a)international diplomacy b)international monetary analysis c)international trade analysis d)international intrigue
c)international trade analysis
Classify each of the following transactions as belonging primarily to the sphere of international trade analysis (T) or international monetary analysis (M). (Enter T for Trade or M for Monetary.): a)foreigners purchase US dollars b)US imports crude oil from ME c)US imposes tariffs on foreign steel d)Chinese government purchases US treasury bonds e) Chinese currency is seen as being undervalued
a) m
b) t
c) t
d) m
e) m
In the real world, the dividing line between trade and monetary issues is a)determined by the legal system b)neither simple nor clear-cut c)always clear ad distinct d) subject to negotiation between trading partners
b)neither simple nor clear-cut
Over the last few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade- that is, trade among East Asian nations-has grown as a share of world trade. More than that, East Asian countries do an increasing share of their trade with each other. Using the gravity model, explain why East Asian countries do an increasing share of their trade with each other. a)The GDP of some East Asian countries has grown faster than others; therefore, the difference in GDP between some East Asian countries is now larger. And as the gravity model predicts, exports from richer countries to poorer countries have increased. b)Since the GDP of East Asian countries has grown, the product of any two East Asian countries’ GDP is now larger. And as the gravity model predicts, the trade volume between them has grown. c)Since the GDP of East Asian countries has grown, the ratio of any two East Asian countries’ GDP is now larger. And as the gravity model predicts, the trade volume between them has grown. d)The GDP of some East Asian countries has grown faster than others; therefore, the difference in GDP between some East Asian countries is now larger. And as the gravity model predicts, exports from poorer countries to richer countries have increased.
b)Since the GDP of East Asian countries has grown, the product of any two East Asian countries’ GDP is now larger. And as the gravity model predicts, the trade volume between them has grown.
In general, which of the following tends to promote the probability of trade volumes between two countries?
a) linguistic and/or cultural affinity b)sizes of economies c)mutual membership in preferential trade agreements d)historic ties e)all the above
e) all the above
One of the principle uses of gravity models is the identification of anomalies in trade. The figure to the right summarizes 2006 data for the seven Central American economies and their trade with the United States. Legend: B-Belize H- Honduras CR-Cost Rica N-Nicaragua ES-El Salvador P-Panama G-Guatemala
Based on this figure, anomalies in trade appear most evident for a)Belize, Honduras, El Salvador, and Costa Rica b)Panama and Guatemala c)Belize d)no anomalies are evident
b)Panama and Guatemala
According to the gravity model, a characteristic that tends to affect the probability of trade existing between any two countries is a)number of varieties produced on the average by their industries b)average weight/value of traded goods c)cultural affinity d)colonial-historical ties e)distance between them
e)distance between them
A general form of the gravity model that economists typically estimate is given by the formula. Empirical studies have found that the values of the exponents: ’a’, ’b’, and ’c’ are very close to…
+1
A century ago, most British imports came from relatively distant locations: North America, Latin America, and Asia. Today, most British imports come from other European countries.
How does this fit in with the changing types of goods that make up world trade? a)A century ago trade was mostly in commodities such as sugar, wheat, and cotton that were not produced in Europe. Today, oil and mining products are the most important commodities traded, which Britain imports from Eastern European countries and Ireland. b)A century ago trade was mostly in agricultural and mining products not produced in Europe. Today, 38 percent of trade is in services, and as the gravity model predicts, Britain trades with the other large European economies.
c)
A century ago trade was mostly in commodities that were not produced in Europe. Today, 61 percent of trade is in manufactured goods, and as the gravity model predicts, Britain trades with the other large European economies.
d)A century ago trade was mostly in commodities that were not produced in Europe. Although they are inferior, these commodities are now purchased from European countries because of higher transportation costs.
A century ago trade was mostly in commodities that were not produced in Europe. Today, 61 percent of trade is in manufactured goods, and as the gravity model predicts, Britain trades with the other large European economies.
The current process of increasing economic integration among national economies, better known as globalization, a)is actually the world’s second wave of such integration b)is not considered to be an issue of much importance c)is a new phenomenon and hence an issue posing some apprehension d)has been a constant since the start of the 20th century
a)is actually the world’s second wave of such integration
In the current Post-Industrial economy, international trade in services (including banking and financial services) a)does not exist b)is relatively small c)is relatively stagnant d)dominates world trade
b) is relatively small
Over the past forty years the composition of developing-country exports has a)undergone a dramatic shift from primary products to manufactures b)undergone a dramatic shift from manufactures to primary products c)remained relatively stable and concentrated in primary products d) remained relatively stable and concentrated in manufactures.
a)undergone a dramatic shift from primary products to manufactures
The sources of modern trade are largely rooted in
a)decisions implemented by multinational organizations b)country differences in climate and natural resources c)treaties written by capitalist governments d)country differences in human and human-created resources
d)country differences in human and human-created resources
The nature of political battles over trade in the modern era
a)has remained unchanged from the battles fought throughout history b)typically centres on issues involving the trade-induced devaluation of labor skills c)centres on disputes between landowners and manufacturers d)originates with the fundamental conflict between workers and capitalists
b)typically centres on issues involving the trade-induced devaluation of labor skills
