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International Economics > Old Exams > Flashcards

Old Exams Flashcards

1
Q

What is GATT

A

An international agreement governing trade

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2
Q

The gravity model implies that trade between countries will be proportional to their gdp

A

True

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3
Q

In unit labor cost a lower number is associated with advantage

A

True

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4
Q

In the Ricardian model comparative advantage is gained by relative labor productivity

A

True

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5
Q

If the value of both products in the specific factor model decreases who loses and who gains

A

No one

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6
Q

If price increases in the specific factor model the production possibility fronteir expands

A

False, prices dont effect possibilities

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7
Q

In the heckscher ohlin model a country abundant in labor will export labor intensive goods

A

True

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8
Q

In the heckscher ohlin model when there is equalibrium a capital rich country charges less for capital intensive goods

A

False, it charges the world markwt price

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9
Q

If the cloth/food increases both supply and demand will increase

A

No just supply, demand has already increased

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10
Q

If a large country subsidizes exports it will deteriorate terms if trade

A

True

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11
Q

If ptoduction increases per unit costs decreases if there are internal economies of scale not external

A

False

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12
Q

When making horizontal FDI what matters are trade costs

A

True

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13
Q

When making vertical FDI desicions what matters is production costs

A

True

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14
Q

Efficiency los is becouse if an inefficient use of a countries resources

A

True

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15
Q

Subsidizing exports will effect producer, consumer, government and agregate how

A

Producer surplus up, vonsumer surplus down, gov finance down and agregate down

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16
Q

If a country is a netvexporter of a good it looses if a rival subsidizes that good

A

True

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17
Q

If a country is a net state importer of a good it gains from foreign subsidies of that good

A

True

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18
Q

How has the infant industry argument been used historically

A

That poor countries have comparative advantages in manufacturing

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19
Q

In the brander spencer model what creates returns greater than the actual subsidy

A

That foreign competitors are scared off

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20
Q

In the 1990s there was an anti globalization movement, who did they think globalization was bad for

A

Factory workers everywhere

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21
Q

If the same jeans cost 60$ and 30£ what is the darra/pund exchange rate

A

2

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22
Q

If € rent is constant as well as expectations $ rent increase will lead to a $ appreciation

A

True

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23
Q

If money supply increases what happens to exchange rate and interest

A

Interest falls and exchange rate depreciates

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24
Q

Increased demand for foreign goods leads to long term depreciation of domestic currency

A

True

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25
Q

London was the financial center durring the gold standard 1870-1914

A

True

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26
Q

Trade is harmful if there are salary differences between the trade partners

A

Generally false

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27
Q

What share of goods and services are exports globally

A

30%

28
Q

The rickardian model gains countries if they export what they have a comparative advantage in

A

True

29
Q

If the production possibility fronteir is a straight line the opportunity cost is constant

A

True

30
Q

What would happen to the number of people employed in the cloth sector if the price of cloth increases in the specific factor model

A

More people are employed

31
Q

If the hecksher ohlin model is in equilibrium relative prices for a good are different globally

A

False, they are the same, no matter the factor endowment

32
Q

In the standard model if production is on the production possibility fronteir there is full employment

A

True

33
Q

If there are two countries producing a good characterised by internal economies of scale trade will lead one to overtake the other all else equal

A

True

34
Q

If there is monopolistic competition more companies force a lower price

A

True

35
Q

What are specific tariffs

A

Import taxes of a specific sum per unit

36
Q

What is the characteristics of an optimal tariff

A

A small one made by a large country

37
Q

The infant industry argument was a pillar stone of import substitution policies

A

True

38
Q

The Brander spencer model identifies matket failures by what

A

Imperfect competition

39
Q

What is the $ cost of a 50 pound jacket if the exchange rate is 1.25

A

62.5

40
Q

If interests are constant increased expectations of interest leads to a present appreciation in exchange rate

A

True

41
Q

If gdp increases what happens to the demand for money

A

It also increases

42
Q

Increased productivity leads to a longterm depreciation while the same is true if the same happens abroad

A

False, opposite abroad, it is relative

43
Q

How does an increase in real income effect aggregate demand

A

Y increases and so does YD and then IM increases which decreases CA but AD still increases. Why did they go into current account?

44
Q

With what variables does the DD model show when the goods market is in equalibrium

A

Production and exchange rate

45
Q

How do you best describe a balance of payment crisis

A

Huge changes in foreign reserves caused by speculations about future exchange rates

46
Q

What is internal equalibrium (balance)

A

Full employment and stable prices

47
Q

Name the three alternatives in the monetary trilemma

A

Monetary policy, exchange rate stability and free trade

48
Q

If a vountry is linked to another with goods and factor mobility will a vommon currency lead to an efficiency gain

A

Yea

49
Q

Who has enforced trade rules since 1994

A

Wto

50
Q

The gravity model of trade explains why sweden trades more with Germany than spain

A

True

51
Q

What factor does the rickardian model attibutes trade to

A

Labor productivity

52
Q

Sallaries are constant in the specific factor modeling

A

True

53
Q

What does the hecksher ohlin model hold constant

A

Tecknology aka productivity

54
Q

When a country has a relative lack of land what happens when that vountry opens up to trade

A

Land intensive goods become cheaper

55
Q

A country can produce no less than when the isovalue line tangents the production possibility fronteir

A

False

56
Q

If a large country imposes a small tariff on an imported goods what will happen

A

Improved terms if trade

57
Q

The market supply curve slopes down when there is economies of scale

A

True

58
Q

If trade costs are high and there are internal economies of scale will a company want to do horizontal fdi

A

Yes, not on external though

59
Q

What does terms of trade gain need to be greater than to validate a tariff

A

The efficiency loss (both consumers and producers lose)

60
Q

Profits might increase for national firms if tariff

A

True

61
Q

Will the optimal tariff be realistic in reality

A

No becouse others will answer in kind

62
Q

What is the argument to subsidize high tech companies

A

The problem of appropriation matket failure as these are seen as producing positive externalities

63
Q

What is the formula gor interest parity

A

R = Rf + (Ee-E)/E

64
Q

In ling term a minetary expansion leads to a depreciation of exchange rate

A

Yes

65
Q

What happens to the dd curve and output when fiscal stimulus

A

Dd curve to right and output increase

66
Q

What is it called when the government decides to appreciate the exchange rate

A

Revaluation

67
Q

Monetary policy is not effective with a fixed exchange rate

A

True

International Economics (19 decks)

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