International Trade Exam Materials
Course Introduction
International Trade examines the flow of goods, services, and capital across borders, focusing on the theories, policies, and institutions that shape global commerce. The course covers concepts such as comparative advantage, trade barriers, and the impact of globalization on economies and societies. Students will explore the roles of international organizations, trade agreements, and the impact of political and economic factors on trade relations. This course also analyzes contemporary issues like trade disputes, protectionism, and their effects on development and income distribution across countries.
Recommended Textbook
International Economics 6th Edition by James Gerber
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17 Chapters
830 Verified Questions
830 Flashcards
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Page 2
Chapter 1: The United States in a Global Economy
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46 Verified Questions
46 Flashcards
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Sample Questions
Q1) Compare and contrast globalization as it existed in the late nineteenth century with globalization at the turn of the twenty-first century (i.e. ,today).
Answer: I would expect my students to address the following:
That in percentage terms,a significant portion of world economic activity was engaged in trade in both periods.
That in the prior period,trade was mostly in agricultural products and commodities,whereas today capital goods play an increasingly important role.
That labor may have been more mobile in the past than it is today due to changes in immigration policies.
That capital was mobile in both periods,but might be more so today,especially given new instruments.
That changes in transportation and communication were significant in both periods in terms of reducing transaction costs and encouraging product and factor mobility.
Q2) What are the positive impacts of migration on migrants and the firms that hire them?
Answer: Higher incomes for migrants and lower labor costs for firms
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3
Chapter 2: International Economic Institutions Since World
War Ii
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50 Verified Questions
50 Flashcards
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Sample Questions
Q1) What is MFN status? How does the WTO reconcile the principle of equal treatment with the preferential treatment created by regional trade agreements?
Answer: MFN status is basically that you will treat all nations participating in the agreement the same.A regional trade agreement creates preferential treatment for nations that are participants.(For example,because of NAFTA,Mexico and Canada get more preferential terms with the United States than other WTO members would. )The WTO recognizes that regional agreements destroy some opportunities for trade (by making nonmembers face higher barriers than members),but believes they create more trade between participants than they destroy.The regional agreements also allow nations to try out new arrangements that may later be adopted more broadly.
Q2) The primary mission of the World Bank today is to
A)provide capital to underdeveloped countries.
B)provide capital to firms around the world.
C)provide financial assistance for the reconstruction of war-damaged nations.
D)provide a safe place for people around the world to put their money.
E)help countries manage their exchange rates.
Answer: A
Q3) Which round of GATT first addressed subsidies?
Answer: The Tokyo Round
Page 4
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Chapter 3: Comparative Advantage and the Gains From Trade
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54 Flashcards
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Sample Questions
Q1) In the simple trade model,what is assumed about labor?
Answer: It is perfectly mobile between the two industries within a nation.
Q2) Based on Table 3.1,trade between the United States and Mexico will occur as long as the relative price of shoes is between
A)three computers and one computer.
B)three computers and two computers.
C)one-half computer and one-third computer.
D)six computers and three computers.
E)None of the above.
Answer: C
Q3) Given that Sandy can produce 10 economics reports or 2 sales calls and Tim can produce 2 economics reports or 1 sales call,which of the following would NOT be a mutually agreeable terms of trade for Sandy and Tim?
A)1 economics report for 1 sales call
B)1 sales call for 3 economics reports
C)1 sales call for 4 economics reports
D)1 economics report for 1/4 of a sales call
Answer: A
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Chapter 4: Comparative Advantage and Factor
Endowments
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Sample Questions
Q1) What are the factors that have been identified that affect a migration decision? Give examples of each.
Q2) Which of the following is NOT a proposition of the Heckscher-Ohlin model?
A)A country has a comparative advantage in the production of that commodity which uses more intensively the country's more abundant resource.
B)The effect of international trade is to tend to equalize factor prices between the trading nations.
C)If Mexico is an unskilled labor abundant country,then Mexico has a comparative advantage in the production of goods that use unskilled labor more intensively.
D)If the United States is a skilled labor abundant country,then the United States has a comparative advantage in the production of goods that use skilled labor more intensively.
E)Countries will completely specialize in the product in which they have a comparative advantage if free trade is allowed to occur.
Q3) In the Heckscher-Ohlin model,what assumption is made about opportunity costs?
Q4) Describe the product cycle,including addressing the various inputs that are required over time and the resulting production location decisions.
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Chapter 5: Beyond Comparative Advantage
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43 Flashcards
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Sample Questions
Q1) Which of the following is TRUE about monopolistic competition?
A)One firm serves as the entire industry.
B)A small number of firms serve the entire market.
C)It is competition among many firms producing similar but differentiated products.
D)The pattern of production and trade is difficult to predict.
E)It enjoys no economies of scale.
Q2) Describe the two sources of economies of scale and how these economies of scale lead to intraindustry trade.
Q3) Describe how Mexico's development strategy changed from the 1950s to today and how that changed the production location decisions of firms.
Q4) Which of the following is NOT a situation providing a potential advantage for Mexico that makes it competitive compared to China in trade with the United States?
A)The product line requires quick turn-around time from or to delivery.
B)The need to manage a just-in-time inventory system
C)Wages are low and the production process is labor intensive.
D)The product is heavy and bulky relative to its final value.
Q5) Which type of industry is likely to see more intraindustry trade?
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Page 7
Chapter 6: The Theory of Tariffs and Quotas
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59 Verified Questions
59 Flashcards
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Sample Questions
Q1) Efficiency losses are
A)deadweight losses caused by consumers being prevented by tariffs from buying products at the world price,products that they value more highly than that price.
B)the total loss in consumer surplus from a tariff.
C)the increase in producer surplus that is created by a tariff.
D)the deadweight loss that is created because domestic firms have to charge higher prices to produce units of output than foreign firms would have to charge.
Q2) Nominal rates of protection
A)are always greater than effective rates of protection.
B)are always smaller than effective rates of protection.
C)refer to the tariffs placed on intermediate goods used to make the final good or service.
D)cannot be negative.
Q3) Nontariff measures are generally much more difficult to eliminate than tariffs and quotas because they are embedded more deeply in national economic policies.
A)True
B)False
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8
Chapter 7: Commercial Policy
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Sample Questions
Q1) The more difficult the goal,the more likely military force is going to be needed to back up economic sanctions.
A)True
B)False
Q2) In the global recession of 2007-2009,world trade declined because nations closed their markets to trading partners.
A)True
B)False
Q3) It seems likely that economic sanctions ultimately would have led to regime change in Iraq.
A)True
B)False
Q4) Trade barriers are an expensive and grossly inefficient way to reach most of the goals for which they are used.
A)True
B)False
Q5) How did the Uruguay Round of GATT impact agriculture?
Q6) Under Special 301,what is the U.S.government required to do?
Q7) Critique the infant industry or the labor argument for protection.
Page 9
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Chapter 8: International Trade and Labor and Environmental Standards
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48 Verified Questions
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Sample Questions
Q1) When countries try to ban child labor,
A)most children start to attend school.
B)family poverty decreases.
C)child labor often goes underground,with children working in the informal economy,family enterprises and remote areas.
D)GDP increases.
Q2) Which region has the highest proportion of its children working?
Q3) The WTO encourages nations to take unilateral action on trade issues,including issues involving environmental protection.
A)True
B)False
Q4) Which of the following is NOT an obstacle to increased international economic integration?
A)Monopoly powers given to domestic companies of individual nations
B)High tariff rates imposed by industrialized nations
C)Health and safety standard requirements
D)Labor and environmental standard requirements
E)Income disparities among and within trading partners
Q5) What are two main obstacles to increased international integration?
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Chapter 9: Trade and the Balance of Payments
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54 Verified Questions
54 Flashcards
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Sample Questions
Q1) The difference between GNP and GDP is
A)GNP includes income received from abroad and excludes income paid abroad.
B)GNP excludes income received from abroad and includes income paid abroad.
C)GNP includes exports and imports.
D)GNP excludes exports and imports.
E)GNP includes capital flows received from abroad and excludes capital flows to foreign countries.
Q2) How do recent current account deficits compare to GNP and to past ratios?
Q3) Your text considers both the low savings and high savings nations and concludes what about the relationship between government budgets and the current account?
Q4) An example of odious debt would be debts on the part of a nation that were incurred by a dictator for the well being of his family. A)True B)False
Q5) Direct foreign investment items have more liquidity than foreign portfolio investment items.
A)True B)False
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Chapter 10: Exchange Rates and Exchange Rate Systems
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) Which of the following is NOT one of the determinants of the gains of adopting a single currency?
A)A well-synchronized business cycle involving all member countries
B)The possibility of factors of production to freely move across borders
C)The willingness and ability of member countries to design policies to address regional imbalances that may develop
D)Widening the common market by allowing other countries to join
E)None of the above.
Q2) Suppose the exchange rates between the United States and Canada are in long-run equilibrium as defined by the idea of purchasing power parity.If the law of one price holds perfectly,then differences between U.S.and Canadian rates of inflation would
A)have no effect on nominal exchange rates.
B)be completely offset by changes in the real exchange rate.
C)be completely offset by changes in the nominal exchange rate.
D)violate the conditions for the law of one price.
E)lead to a change in the real purchasing power of each country's currency when it is converted to the other country's currency.
Q3) How is dollarization different from monetary union?
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Chapter 11: An Introduction to Open Economy
Macroeconomics
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Sample Questions
Q1) The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.
A)True
B)False
Q2) Contractionary fiscal policy can lead to a depreciation of the nation's currency.
A)True
B)False
Q3) Describe the policies a nation would follow to correct a current account deficit.What are the primary purposes of each type of policy?
Q4) How does expansionary monetary policy affect a nation's exchange rate?
Q5) When aggregate demand increases,
A)the price level is likely to rise as GDP rises.
B)the price level is likely to fall as GDP rises.
C)aggregate supply will shift to the right.
D)aggregate supply will shift to the left.
Q6) How is an exchange rate depreciation likely to affect imports and exports in the short run and over a longer period of time?
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Chapter 12: International Financial Crises
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Sample Questions
Q1) Small devaluations are usually sufficient to stem capital flight.
A)True
B)False
Q2) A flexible exchange rate system crisis involves
A)a revaluation of the currency.
B)a rapid and uncontrolled depreciation of the currency.
C)a decrease in the dollar value of the country's international debt.
D)a sure political collapse of the ruling government.
E)All of the above.
Q3) Describe the Mexican peso crisis in terms of the imbalances that caused it,the policies Mexico used to respond,and the lessons learned.
Q4) The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was
A)raising their domestic interest rates to stabilize the collapsing currencies.
B)using their monetary and fiscal policies alone.
C)use capital controls.
D)adopting a flexible exchange rate system.
E)adopting a fixed exchange rate system.
Q5) What are the costs of capital mobility?
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Chapter 13: The United States in the World Economy
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30 Verified Questions
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Sample Questions
Q1) The main area of economic activity that Canada chose not to open to free trade is
A)agriculture.
B)oil and gas.
C)lumber.
D)the cultural industries.
E)financial services.
Q2) Under NAFTA,environmental standards are
A)harmonized around Mexican rules.
B)harmonized around U.S.rules.
C)harmonized around Canadian rules.
D)harmonized around a combination of the rules in all three countries.
E)not harmonized.
Q3) Twenty-four years before CUSTA,another agreement between the same countries covered trade in
A)textiles.
B)steel.
C)autos.
D)agriculture.
E)telecommunications.
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Page 15
Chapter 14: The European Union: Many Markets Into One
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49 Verified Questions
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Sample Questions
Q1) Which of the following is the treaty that took the participating countries from a free trade area to a common market?
A)The Treaty of Rome
B)The Maastricht Treaty
C)Single European Act
D)Treaty on European Union
Q2) The roots of the European Union are in agreements within the coal and steel industries.
A)True
B)False
Q3) The founding document of the European Economic Community,and the document that continues to provide the basis for the European Union is the
A)Treaty of Brussels.
B)Delors Report.
C)Treaty of Rome.
D)Single European Treaty.
E)Maastricht Treaty.
Q4) When did the European Union become a common market?
Q5) Members of which European Union institution are popularly elected?
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Chapter 15: Trade and Policy Reform in Latin America
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Sample Questions
Q1) The Lost Decade refers to the years between approximately A)1975 and 1985.
B)1980 and 1990.
C)1987 and 1997.
D)1972 and 1980.
E)1960 and 1970.
Q2) According to Prebisch and other ISI theoreticians,countries should begin to shift their comparative advantage away from primary commodity production by first producing
A)industrial goods such as pumps and generators.
B)complex consumer goods such as autos and appliances.
C)advanced industrial goods such as chemical and electronics.
D)simple consumer goods such as food products and textiles.
E)minerals and agricultural products.
Q3) What is called for with heterodox stabilization policies?
Q4) The external shock that hit Mexico and other Latin American countries in the early 1980s that caused the Lost Decade was a collapse in world oil prices.
A)True
B)False
Q5) What is the primary reason exchange rates were overvalued under ISI?
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Chapter 16: Export-Oriented Growth in East Asia
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Sample Questions
Q1) What appears to have been one of the major causes of the Asian financial crisis?
Q2) Export promotion is widely regarding by economists as a positive role for government policy makers to play because it is very effective at promoting economic growth.
A)True
B)False
Q3) Which of the following is a false statement about education in the HPAE?
A)An emphasis on state funding of advanced degree programs,such as engineering and computer science,increased manufacturing production significantly.
B)Literacy rates rose dramatically in the HPAE and laid a foundation for a skilled labor force.
C)As the average educational level rose,workers could take on more technological,sophisticated production,pushing new investment into product lines.
D)Spending was focused on the primary and secondary level,where it has the greatest social impact.
Q4) What did the HPAE do to share wealth across all levels of society?
Q5) What types of government intervention did the World Bank determine was common in the HPAEs?
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Chapter 17: The Bric Countries in the World Economy
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Sample Questions
Q1) Describe China's reform path,including the forces that started China's reform efforts and how they continued through the 1980s and early 1990s.
Q2) Who was the leader of Chinese economic reforms?
Q3) China has few state-owned enterprises left in its economy.
A)True
B)False
Q4) What did China create to allow more international trade?
A)Special economic zones
B)Foreign exchange centers
C)More open and transparent government meetings
D)New educational efforts
Q5) Why have China and India received so much international attention and investment?
Q6) Russia chose a slow approach to creating a private economy and China chose a fast approach.
A)True
B)False
Q7) What is the difference between Chinese and Indian trade in services?
Q8) Why has Chinese exchange rate policy been controversial?
Q9) Describe how Brazil and Russia are similar and how they are different. Page 19
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