Econ 340 Alan Deardorff Winter Term 2009 Final Exam Page 1 of 21 NAME: ____________________________________ Student ID No.: ____________________________ Economics 340 International Economics Prof. Alan Deardorff Final Exam April 30, 2009 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 120 minutes to complete it. Check that you have all 21 pages of the exam, including this cover sheet. 5. Part 1 consists of 35 multiple choice questions worth 1 point 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 63 points total. 7. That leaves 2 points unaccounted for. You will get these if (and only if) you correctly enter your name and ID number on both this exam booklet and the scantron sheet (so that the computer can read it), and if you enter the form number (see above) on the scantron. 8. Good luck!Econ 340 Alan Deardorff Winter Term 2009 Final Exam Page 2 of 21 FORM 0 Economics 340 Final Exam Part 1: Multiple Choice (1 point each: 35 points) 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. Which of the following statements about the U.S. relative position in the world economy is not true? a. The U.S. imports more than any other country. b. The U.S. scores higher than any other country on the Heritage Foundation’s index of economic freedom. c. The percentage of exports in GDP is smaller in the U.S. than in Germany. d. The U.S. exports less than the European Union. e. The total of assets in the U.S. that are owned by foreigners (including various forms of loans to us) is greater than the total of assets abroad that are owned by people and companies in the U.S. 2. WIPO is a. An international nongovernmental organization that promotes women’s rights among multinational enterprises. b. The provision of the GATT, later removed in the WTO, that required a minimum wage for manufacture of exported goods. c. The organization, based in Basel, Switzerland, that drafts international accounting regulations. d. The agency within the World Bank that focuses on poverty alleviation. e. The United Nations organization that promotes the protection of patents, trademarks, and copyrights.Econ 340 Alan Deardorff Winter Term 2009 Final Exam Page 3 of 21 3. During the half century since the end of World War II, a. The major currencies of the world, which initially had flexible exchange rates, have become fixed. b. The World Bank has switched from providing assistance to poor countries to primarily settling transactions among rich countries. c. The GATT has been transformed into the WTO. d. The IMF has changed from being a members-only bank to being a mutual fund for investment in emerging-economy stock markets. e. Tariffs levied by developed countries against developing-country exports have increased. 4. Jack can type 60 words a minute and can solve an algebra problem in 10 minutes. With respect to which of the following does Jack have a comparative advantage in typing? a. Janet, who types 120 words a minute and needs 3 minutes to solve the algebra problem. b. Jill, who types 40 words a minute and needs 20 minutes to solve the algebra problem. c. Jessica, who types 80 words a minute and needs 15 minutes to solve the algebra problem. d. All of the above. e. None of the above. 5. In the discussion of Boeing and Airbus that appeared in the assigned article by Paul Krugman, the main message was that a. George Bush was a bad president. b. A firm’s profits can be increased by a subsidy. c. Countries are able to export only if they have comparative advantage. d. In the New Trade Theory, a country may be able to benefit by using a subsidy. e. Countries that use subsidies only provide benefit to other countries, not themselves. 6. The figure shows the effects of a tariff in a small country. Using the labeled areas, how much of the loss to consumers, due to the tariff, is a gain to somebody else? a. None b. b + d c. a + c d. b + c + d e. a + b + c + dEcon 340 Alan Deardorff Winter Term 2009 Final Exam Page 4 of 21 7. When a large country levies a tariff on imports a. The world price falls. b. Demanders of the good on the domestic market are hurt c. Foreigners are hurt. d. The domestic price rises by less than the tariff. e. All of the above. 8. When is a product standard a nontariff barrier? a. When it requires a technology that only foreign firms possess. b. When it is biased against imports in terms of procedures for certifying compliance. c. When it bans all sales of a product that is injurious to health. d. When it requires both domestic and foreign producers to pay a fee to the domestic government for certification. e. When its only purpose is to makes products of different suppliers compatible. 9. Which of the following is an example of dumping into the United States? a. Indonesia, because of its low wages, exports shirts to the US for a price below those produced in the US. b. Japan exports cars to the US that are cheaper than we could produce them here because of Japan’s superior technology. c. France sells wine in the US for a lower price than it charges in France, because France has a tariff on wine. d. Argentina sends beef to the US that is inferior to what it sells at home, but is able to charge a higher price for it here because it tastes better than US beef. e. All of the above except (d). 10. Trade Adjustment Assistance a. Is money given by the WTO to developing countries to help them implement their obligations as members. b. Is assistance provided by the World Bank to countries seeking to subsidize their exports. c. Is a permanent subsidy given by the U.S. government to firms so that they
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