Economics 340First Midterm ExamPart II: Short Answer CountryCountryCountryCountryEcon 340 Alan Deardorff Fall Term 2007 First Midterm Page 1 of 15 NAME: ____________________________________ Student ID No.: ____________________________ Economics 340 International Economics Prof. Alan Deardorff First Midterm Exam October 22, 2007 INSTRUCTIONS: READ CAREFULLY!!! 1. Please do not open the exam until you are told to do so. 2. PLACE YOUR NAME AND STUDENT ID NO. (THE EIGHT DIGIT NUMBER FROM YOUR M-CARD) ON THE EXAM AND ON THE SCANTRON SHEET. 3. After you are told to open the exam, find the FORM NUMBER at the top of page 2 and copy it to the scantron sheet. 4. This exam has 100 points and you have approximately 80 minutes to complete the test. Check that you have all 15 pages of the exam, including this cover sheet. 5. Part 1 consists of 25 multiple choice questions worth 2 points each. Answers to these should be marked on the scantron sheet using a #2 pencil. There are no penalties for guessing. 6. Part 2 consists of short-answer questions for which you must provide written answers on these sheets. Point values for questions in Part 2 are indicated in parentheses. Part 2 has 48 points total. 7. That leaves 2 points unaccounted for. You will get these if (and only if) you put your name and ID number on both this exam booklet and the scantron sheet, and if you enter the form number (see above) on the scantron. 8. Good luck!Econ 340 Alan Deardorff Fall Term 2007 First Midterm Page 2 of 15 FORM 0 Economics 340 First Midterm Exam Part 1: Multiple Choice (2 points each) Select the best answer of those given. Answers to this part should be marked on the scantron sheet using a #2 pencil. There is only one correct answer per question, and there is no penalty for guessing. 1. How have US average tariffs on imports changed since the end of World War II? a. Although some tariffs have fallen, others have risen so that the average has remained approximately unchanged. b. Because of the unique position of the US in World War II, we ended the war with zero tariffs. Over time, these have risen to about 10%. c. US tariffs against other rich countries have remained over 20%, but to help developing countries we have reduced tariffs on their exports, so that our average tariff is now just under 12%. d. US average tariffs today are only 1/10 as large as they were at the end of World War II. e. The US has been the world’s strongest champion of free trade since well before World War II, and our tariffs have been near zero, with only minor exceptions, ever since. 2. In class you saw that Singapore’s exports are 232% of Singapore’s GDP. That is possible because a. Singapore reports more exports than it actually has. b. Reported exports of Singapore are actually those of the entire Malay peninsula, including Malaysia. c. GDP measures only value added, while the value of exports includes the value of intermediate inputs that may have been imported. d. A large part of Singapore’s GDP is produced by the informal economy and is therefore unreported. e. Prices of Singapore’s exports are 50% higher than of the goods that it keeps for itself.Econ 340 Alan Deardorff Fall Term 2007 First Midterm Page 3 of 15 3. Which of the following was the name of one of the GATT negotiating rounds conducted before the WTO was created? a. NAFTA b. Tokyo c. Nixon d. Seattle e. Doha 4. By definition, public goods are a. excludable b. nonrival c. perfectly competitive d. provided by government e. imported 5. The term “conditionality” refers to a. the requirements that the IMF imposes on developing countries in return for loans. b. the advantage that a country has in trade if its labor requirement per unit of output of a good is less than that of all other countries. c. the tariff reductions that the US and EU expected from developing countries in Cancun in return for reducing agricultural subsidies. d. the bribes that customs officers require in some countries before they let imported goods in. e. the rules in GATT that permit a country to treat another better than its most favored nation. 6. Josh Bivens, in his assigned article “Marketing the Gains from Trade,” argues several things. Which is the following is not among his claims? a. The claim by the Peterson Institute that the US could gain roughly 4% of GDP from trade liberalization is not generally accepted by economists. b. Estimates of trade barriers in services are very uncertain. c. Trade is not beneficial to countries as a whole. d. Computer models of the gains from trade typically ignore the effects on the distribution of income. e. Advocates of free trade have greatly exaggerating the benefits from trade. 7. Suppose that Japan and Korea require the amounts of labor shown in the table below for producing one unit of steel and on unit of wine. ThenEcon 340 Alan Deardorff Fall Term 2007 First Midterm Page 4 of 15 a. Korea has an absolute advantage in wine. b. Japan has a comparative advantage in steel. CountryGood Japan KoreaSteel 40 50Wine 2 5c. Korea has a comparative advantage in wine. d. Japan has an absolute advantage in steel. e. All of the above. 8. The diagram below shows supply and demand curves for the same good in two countries, A and B. Based on the prices and areas labeled there, a. Country B has a comparative advantage in this good. b. The autarky price in Country A is P2. c. Moving from autarky to free trade makes demanders in Country B better off by the amount c+d. d. Moving from autarky to free trade makes suppliers in Country A worse off by the amount a+b. e. All of the above. P PSDS D a b cdP1 P2 P3 QQCountry A Country B 9. The Factor Price Equalization result of the Heckscher-Ohlin Model implies that, a. All workers are equally productive. b. If a country fails to trade, its skilled workers will earn no more than its unskilled workers. c. Trade causes the return to human capital to be the same as the return to physical capital. d. Free trade causes identical factors in different countries to be paid more nearly the same than they were in autarky. e. For countries to trade freely, they must tax wages so that firms in all countries pay the same.Econ 340 Alan Deardorff Fall Term 2007 First Midterm Page 5 of 15 10. The New Trade Theory differs from the Ricardian and Factor Proportions theories
View Full Document
Unlocking...