College of Economics, Management and Information System

Department of Economics

Spring Semester 2013-2014

MID EXAM-II (20%)

ECON 324 -InternationalTrade

Date: 15/04/2014

Time:2:00 PM -2:50 PM

Venue: 31-5

Faculty: Shamsudheen Arumathadathil

Examination Notes: Total 4 pages

Part A (Multiple choices)

Answer all the questions

Each question carries 1/2points

  1. The Uruguay round of GATT gave birth to

(a)WTO(b) IMF

(c)World bank(d) European Union

  1. Which of the following is not an international economic problem?

(a) Financial crisis(b) Trade protection in advanced countries

(c)Deep poverty in LDCs(d) Achieving sustainable development.

  1. A tariff of $10 on each imported bicycle with an international price of $100 is

(a) Specific tariffs(b) Ad valorem tariffs

(c)Both a and b (d) None of these

  1. Which one of the following is a character of export supply curve?

(a)It intersects the vertical axis(b) Flatter than the domestic supply curve

(c)It is upward sloping (d) All the above

  1. Financial or portfolio capital generally move to nations and markets where

(a) Interest rates are high(b) Interest rates are low

(c)No influence on interest rates(d) None of these

  1. Which of the following allows free movements of factors of production?

(a) Preferential trade agreements(b) Free trade area

(c)Customs union(d) Common market

  1. Via introducing the import quota the domestic price of the imported good

(a)Sometimes raises(b) Always reduces

(c)Always raises(d) None of these

  1. Purchases by the government (or public firms) can be directed towards domestic goods, even if they are more expensive than imports is known as

(a) Local content requirement(b) Red-tape barriers

(c)National procurement(d) None of these

  1. The costs and benefits of a tariff or other trade policy instruments measured for home country using the concepts of

(a) The domestic consumers lose(b) Domestic producers of a good gain

(c)Home government tariff revenue (d) All the above

  1. Which of the following is an example of trade expansion policy?

(a) Export tax(b) Tariff

(c)Import subsidy(d) Voluntary export restraint

(10x1/2=5 points)

Part B (True or False)

Answer all the questions

Each question carries1/2 points

  1. A small country is a country that cannot affect its terms of trade no matter how much it trades with the rest of the world.

(a)True

(b)False

  1. The terms of trade is the relative price of the importable good expressed in units of the exportable good.

(a)True

(b) False

  1. A tariff raises the price of a good in the importing country and lowers it in the exporting country.

(a)True

(b) False

  1. Export means producing goods domestically and selling abroad.

(a)True

(b) False

  1. Economic union is an example of shallow integration stage.

(a)True

(b)False (5x1/2 = 2.5 points)

Part C (Short answer questions)

Answer any five ofthe following questions

Each carries 1point

  1. What are the main properties of import demand curve?
  2. What is an economic union?
  3. Briefly explain about voluntary export restraint (VER)
  4. Differentiate between tight and open regionalism.
  5. What do you mean by gravity model of trade?
  6. What are the main objectives of WTO?

(5x1= 5points)

Part D (Short essay questions)

Answer any three questions.

Each carries 2.5 points.

  1. What do you mean by globalization? Briefly explain the pros and cons of globalization.
  2. Diagrammatically explain the costs and benefits of a tariff for the Importing Country.
  3. Diagrammatically explain the effects of an export subsidy.
  4. Conduct a debate on economic regionalism and multilateralism. Support your arguments with sufficient points.

(3x2.5= 7.5 points)

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