Trade Policy and Economic Integration
Final Exam
Course Introduction
This course examines the formulation, implementation, and impact of trade policy within the context of increasing global economic integration. Students will explore the theoretical foundations of international trade, analyze the rationale behind protectionism and liberalization, and assess the economic, political, and social consequences of various trade agreements and organizations such as the World Trade Organization (WTO), regional trade blocs, and bilateral accords. The course also covers the interplay between trade policy and development, the dynamics of trade negotiations, and the challenges associated with integrating emerging economies into the global marketplace. Through case studies and policy analysis, students gain a comprehensive understanding of how trade policy shapes economic relations among countries and influences global economic outcomes.
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) The trade-to-GDP ratio is calculated by
A)exports divided by GDP.
B)imports divided by GDP.
C)exports plus imports divided by GDP.
D)exports minus imports divided by GDP.
E)exports divided by imports.
Answer: C
Q2) Countries such as the United States that have large populations tend to have
A)higher trade-to-GDP ratios.
B)lower trade-to-GDP ratios.
C)relatively greater capital outflows.
D)relatively smaller capital outflows.
E)None of the above.
Answer: B
Q3) Open economies grow slower than closed ones.
A)True
B)False
Answer: False
Q4) Why are high domestic savings rates important?
Answer: It correlates with high domestic investment
Page 3
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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) Describe the criticisms about decision making at the IMF and the World Bank.Which types of policies are thought to reflect bias? What types of costs are not considered? What is the fundamental question critics raise about the operations of the international governmental economic institutions?
Answer: Voting structures at the IMF and World Bank give developed nations,and the U.S.especially,control over decision making,making it hard to delineate whose interests are being served.For example,policies favoring free capital flows and privatization of publicly owned industries are thought to reflect the biases of industrialized countries rather than overwhelming economic consensus.Implementation and adjustment costs may be much greater in developing countries because they have higher overall levels of unemployment,less diversification in their economies,and fewer resources to develop new infrastructure or to do other spending necessary to take advantage of new opportunities.Fundamentally,critics ask whether they are fostering development and economic security or generating greater economic inequality and compounding risks to vulnerable groups.
Q2) The majority of economists favor open capital flows.
A)True
B)False
Answer: False
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Chapter 3: Comparative Advantage and the Gains From Trade
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Sample Questions
Q1) The United States' comparative advantage over Japan in the production of rock-n-roll music implies that (for a similar quality of music)the
A)opportunity cost of production is less in Japan.
B)absolute cost of production is less in the United States.
C)absolute cost of production is less in Japan.
D)opportunity cost of production is less in the United States.
E)None of the above.
Answer: D
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) When did the Republic of Korea change its economic policies?
Answer: The 1960s
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Chapter 4: Comparative Advantage and Factor
Endowments
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Sample Questions
Q1) Using the specific factors model,assume that strawberry production requires the specific factor of land,tractor production requires the specific factor of capital,and labor is variable.If the United States is capital abundant compared to Mexico,and Mexico is land abundant compared to the United States,then in the short run with trade we would expect
A)the income of U.S.land owners to increase.
B)the income of U.S.workers to increase.
C)the income of Mexican workers to increase.
D)the income of Mexican land owners to increase.
Q2) What is the source of comparative advantage in the Heckscher-Ohlin model?
Q3) According to OLI theory,a firm might be unwilling to license its production to a foreign firm for fear that its technology may be stolen or its brand name harmed,which leads the firm to internalize control over its asset and set up its own foreign subsidiary.
A)True
B)False
Q4) What are the factors that have been identified that affect a migration decision? Give examples of each.
Q5) Offshoring required which types of advances?
Q6) How is offshoring of services different from past trade patterns?
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Chapter 5: Beyond Comparative Advantage
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43 Flashcards
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Sample Questions
Q1) One reason that a large share of the trade between high-income industrial economies is intraindustry trade is because
A)it is more advantageous than interindustry trade.
B)high-income industrial economies produce in the first stage of the product cycle.
C)high-income industrial economies are wealthier than developing countries.
D)high-income industrial economies have dissimilar resource endowments in absolute terms.
E)it allows firms to take advantage of internal economies of scale.
Q2) Intraindustry trade refers to
A)international trade of products made within the same industry.
B)international trade of products made across different industries.
C)trade that occurs as a result of comparative advantage.
D)the exchange of non-similar items.
E)trade that occurs mostly within developing countries.
Q3) Which of the following is an example of intraindustry trade?
A)Trading peanut oil for tractors
B)Trading crude oil for automobiles
C)Trading Nokia smartphone for Apple iPhones
D)Trading jeans for cotton
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Page 7
Chapter 6: The Theory of Tariffs and Quotas
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Sample Questions
Q1) Which of the following is NOT an expected benefit of reducing nontariff barriers to trade?
A)Fewer firms to compete with
B)Lower prices for many goods
C)Increase in the volume of exports and imports
D)Increase in production levels
E)Improved overall economic welfare
Q2) In the case of a small country,producer surplus
A)increases more with a tariff than with an equivalent quota.
B)increases more with a quota than with an equivalent tariff.
C)is not changed by tariffs or quotas.
D)increases the same with tariffs and equivalent quotas.
E)increases more with quotas.
Q3) A real cost of tariffs and quotas that is difficult to measure is that they
A)encourage rent seeking.
B)shift income from consumers to producers.
C)limit the quantity of imports.
D)reduce wages.
E)cause deflation.
Q4) Why is the Doha Round called the Doha Development Round?
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Chapter 7: Commercial Policy
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46 Verified Questions
46 Flashcards
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Sample Questions
Q1) Economic sanctions
A)usually work to create policy change in the targeted country.
B)are more likely to work if the international community supports them.
C)are more likely to work if military force is not used.
D)never work to create policy change in the targeted country.
E)Both A and C.
Q2) The system of trade rounds under GATT and the WTO has been successful at creating trade rules and reducing trade barriers.
A)True
B)False
Q3) The WTO's Doha Development Agenda is only considering market access issues in agriculture,such as tariffs and quotas,because export subsidies and production subsidies are considered less harmful and have not been part of the GATT or WTO agenda.
A)True
B)False
Q4) The most common form of tariff is a countervailing duty.
A)True
B)False
Q5) Under Special 301,what is the U.S.government required to do?
Page 9
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Chapter 8: International Trade and Labor and Environmental Standards
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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 of the following is TRUE?
A)Child labor is most common in urban areas.
B)Child labor is most common in the textile industry.
C)Child labor is most common in production aimed at export markets.
D)If child labor were stopped,families would have greater economic success.
E)Agriculture is the main industry using child labor.
Q3) The best way to address differences in labor and environmental standards is through trade barriers.
A)True
B)False
Q4) Which region has the highest proportion of its children working?
Q5) What environmental problem gets worse as income rises according to your text?
Q7) Which region has the most children (total number)working? Page 10
Q6) In what industrial sector are children most likely to be working?
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Chapter 9: Trade and the Balance of Payments
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Sample Questions
Q1) Briefly describe the factors that contributed to the U.S.Current Account deficits of the 1990s.
Q2) Based on Table 9.2,total savings,private plus public,is equal to
A)3 percent of GNP.
B)18 percent of GNP.
C)16 percent of GNP.
D)20 percent of GNP.
E)None of the above.
Q3) People sometimes worry that American trade with other countries will lead to large U.S.trade deficits and the movement of massive amounts of American capital out of the country.This worry is unfounded because countries cannot
A)increase savings at the same time that a trade deficit grows.
B)spend more than they earn.
C)invest more than they save.
D)have both current account and financial account deficits at the same time.
E)increase their trade with other countries without increasing their savings.
Q4) What were some of the consequences of the large current account deficits that the U.S.ran over a long period of time that culminated in the crisis that began in 2007?
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Page 12
Chapter 10: Exchange Rates and Exchange Rate Systems
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56 Verified Questions
56 Flashcards
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Sample Questions
Q1) If Juana contracts to buy U.S.office equipment in U.S.dollars and her domestic currency depreciates against the U.S.dollar between the time the contract is signed and the bill is paid,she will wind up paying less for the equipment because she stayed in the spot market.
A)True
B)False
Q2) How is dollarization different from monetary union?
Q3) Which of the following is a FALSE statement concerning purchasing power parity?
A)Purchasing power parity states that dollars will tend to exchange for pounds at a rate that maintains a constant purchasing power of a given quantity of a currency.
B)Over the long term,a Big Mac in New York will tend to cost the same as a Big Mac in London.
C)There should not be significant deviations in the long-run value of purchasing power parity.
D)Over the long run,purchasing power parity exerts influence over exchange rates.
E)An overvalued dollar buys more in Britain than it does in the United States.
Q4) When did major currencies begin floating against each other,ending the Bretton Woods system?
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Page 13
Chapter 11: An Introduction to Open Economy
Macroeconomics
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Sample Questions
Q1) Describe some of the potential problems with using expansionary fiscal policy.
Q2) 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
Q3) Contractionary fiscal policy attempts to shift aggregate demand to the right. A)True
B)False
Q4) When a central bank sells bonds,cash reserves throughout the financial system increase,interest rates fall,and investment spending increases.
A)True
B)False
Q5) For any given increase in spending that is not directly caused by an increase in income,the impact on equilibrium GDP is greater than the initial spending increase. A)True
B)False
Q6) How does expansionary monetary policy affect a nation's exchange rate?
Page 14
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Chapter 12: International Financial Crises
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Sample Questions
Q1) Tax systems in developing countries tend to be efficient and reliable.
A)True
B)False
Q2) Which of the following was NOT one of the causes of the Asian financial crises of 1997 and 1998?
A)A current account deficit and financial account surpluses
B)The use of exports as an engine of economic growth by the countries involved
C)China's 1994 devaluation of its fixed exchange rate
D)The appreciation of the U.S.dollar and depreciation of the Japanese yen
E)Crony capitalism
Q3) Exchange rates and banking systems are often the variables through which the contagion effects of a crisis are spread from one country to another.
A)True
B)False
Q4) Deficits financed by borrowed money lead to inflation,and in a fixed or crawling peg exchange rate system,this leads to the real exchange rate being undervalued.
A)True
B)False
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15
Chapter 13: The United States in the World Economy
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The single most important reason for Canada's seeking a free trade agreement with the United States was to
A)ensure its access to the U.S.market.
B)ensure its ability to join NAFTA.
C)harmonize its environmental laws with the United States.
D)avoid international outsourcing in low wage countries.
E)ensure the continuation of its social programs.
Q2) What is the significant feature of a preferential arrangement?
Q3) Describe the trends in U.S.manufacturing employment and U.S.manufacturing output over the last 40 years.What factors have contributed to these?
Q4) What two trends was Canada trying to address in negotiating CUSTA?
Q5) One reason why most economists forecast that the effects of NAFTA on the U.S.economy would be small is because
A)NAFTA does not bring down tariffs far enough.
B)the Mexican economy is small relative to the U.S.economy.
C)NAFTA trade opening provisions only cover a handful of sectors.
D)Mexico was not expected to live up to its obligations under the agreement.
E)the United States was not expected to live up to its obligations under the agreement.
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Chapter 14: The European Union: Many Markets Into One
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49 Verified Questions
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Sample Questions
Q1) The European Union membership criteria includes all of the following except
A)the country must participate in free trade with all of its goods and services.
B)the country must follow market-based economics.
C)the country must formally adopt the EU-wide rules such as technical standards,environmental inspections,banking supervision,etc.
D)the country must be a stable functioning democracy.
E)None of the above.
Q2) Which agreement removes customs and passport controls at the common borders of many EU countries?
Q3) As Europe explored monetary union,evidence to date suggests that increased variability in exchange rates
A)reduces foreign trade and investment.
B)increases foreign trade and investment.
C)does not seem to have an impact on foreign trade and investment.
D)hurts foreign investment but not trade.
E)hurts foreign trade but not investment.
Q4) What are the two largest expenditure categories in the EU budget?
Q5) When did the European Union become a common market?
Q6) Members of which European Union institution are popularly elected?
Page 17
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Chapter 15: Trade and Policy Reform in Latin America
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Sample Questions
Q1) The Baker Plan emphasized renewed commercial bank loans as a way to restart capital flows to Latin America.
A)True
B)False
Q2) Overvalued exchange rates were a persistent problem under ISI policies.In part,this was a deliberate policy in order to
A)increase imports.
B)discourage exports.
C)help targeted industries sell their exports.
D)help targeted industries buy imports.
E)increase the competition for targeted industries.
Q3) The difference between an orthodox stabilization plan and a heterodox stabilization plan is that the orthodox plan
A)targets the problem of inflation,while the heterodox plan targets unemployment.
B)reduces trade flows less than the heterodox plan.
C)does not include higher taxes and the heterodox plan does.
D)does not include wage and price controls and the heterodox plan does.
E)eliminates budget deficits,while the heterodox plan only reduces them.
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Chapter 16: Export-Oriented Growth in East Asia
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Q1) Property rights are relatively secure and free from the threat of nationalization in the HPAE.
A)True
B)False
Q2) The main contributor to growth in the HPAE according to empirical research was government industrial policies.
A)True
B)False
Q3) Which of the following is NOT a contributing factor into why the HPAE were able to rapidly accumulate physical and human capital?
A)A stable macroeconomic environment meant low inflation
B)Loans from multilateral institutions such as the IMF,the World Bank,and regional development banks
C)The demographic transition meant that the proportion of their population working was higher.
D)A rapid rise in income made greater amounts of savings possible.
Q4) Identify at least three key factors in the HPAE's economic success?
Q5) Which factors account for most of the growth in the HPAEs?
Q6) What appears to have been one of the major causes of the Asian financial crisis?
Page 19
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Chapter 17: The Bric Countries in the World Economy
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Sample Questions
Q1) China linked its exchange rate to the U.S.dollar which meant in the 2004-2007 period
A)it appreciated against most other currencies,hurting its manufacturing competitiveness.
B)it depreciated against most other currencies,making its products cheaper.
C)it decreased the size of its merchandise trade surplus.
D)it overvalued its currency,making it hard to attract foreign investment.
Q2) Which of the following is FALSE about services trade for India and China?
A)China exports more services than India does.
B)India has a trade surplus in services.
C)China has a trade surplus in services.
D)India trades primarily information services and other business services.
Q3) What was the thesis to James O'Neill's paper where he introduced the BRIC acronym?
A)These nations were going to collapse.
B)These were failing states and thus a treat to global stability.
C)These economies were moribund and needed IMF assistance.
D)These nations had the potential to change global trade and capital flows.
E)These nations would repeat the patterns of development and business cycles as the United States and Europe had in their economic history.
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Page 20