International Economics Islam

Front 1

1.In the attached diagram, if the Japanese demand for US dollar decreases from D2to D1, which of the following impact on the exchange rate of the two countriescurrencies will be true?

Back 1

E. Both (a)and (d) above 100% (Yen will appreciate against the Dollar& Dollarwill depreciate against the yen)

Front 2

Whichof the following is true of the pamphlet known as “the Petition of the Candlemakers”?

Back 2

C. It waswritten by Frederick Bastiat as a satire in support of free trade 100%

Front 3

3.If trade is open and voluntary, which of the following would be true?

Back 3

Tradewould be mutually beneficial

Tradewould allow increased world production

Tradewould allow production specialization

Front 4

Tradeis needed when countries specialize and at the same time specialization ispossible when trade is allowed.

Back 4

TRUE

Front 5

Assumingthat variable P represents the relative Unit Labor Costs (ULC) ratios of twocountries and the variable X represents the relative export ratios of twocountries, a linear regression of X = a + b P as per Golub test would supportempirically the Ricardo’s theory of comparative advantage under which of thefollowing situation?

Back 5

B. If theslope coefficient is found to be negative 100%

Front 6

DohaDevelopment round of trade negotiation was initiated by which organization andsince what year?

Back 6

C. The WTOsince 2001 100%

Front 7

Whichof the following economists advocated the virtues of the mercantilistphilosophy of trade?

Back 7

D. ThomasMunn 100%

Front 8

Whichof the following economists advocated the virtues of open and free trade?

Back 8

Adam Smith

DavidRicardo

FrederickBastiat.

Front 9

Whichof the following is true of the Gravity model of trade?

Back 9

Bilateraltrade decrease with distance

Bilateraltrade increases with the size of an economy

Front 10

Whichof the following economists advocated the virtues of protectionism?

Back 10

D. ThomasMunn 100%

Front 11

Considerthe attached table which gives information about the labor requirementcoefficients for two goods Oranges and Grapes for two countries Mexico andArgentina along with their respective total available labor supply. Assume thelabor is the only resource needed in the production of the goods and that laboris homogeneous within a nation. Draw the corresponding total production tableand the appropriate PPF curve for both Mexico and Argentina by plotting Grapesvertically and Oranges horizontally. Following Ricardo’s theory of comparativeadvantage, which country has comparative advantage in producing oranges? Country Oranges (O) Grapes (G) Total Labor Supply Mexico 0.5 0.25 200 Argentina 0.2 0.4 400

Back 11

B. Argentina 100%

Front 12

Considerthe attached table which gives information about the labor requirementcoefficients for two goods Oranges and Grapes for two countries Mexico andArgentina along with their respective total available labor supply. Assume thelabor is the only resource needed in the production of the goods and that laboris homogeneous within a nation. Draw the corresponding total production tableand the appropriate PPF curve for Argentina by plotting Grapes vertically andOranges horizontally. What is the pre-trade domestic opportunity cost ratio(MRT) for Argentina of producing one unit of orange in terms of the units ofgrapes to be given up? Country Oranges (o) Grapes (G) Total Labor Supply Mexico 0.5 0.25 200 Argentina 0.2 0.4 400

Back 12

A. 1 O =0.50 G

Front 13

Ifprice of commodity X (Px) is $20 per unit and the price of commodity Y (Py) is$5 per unit and the total income (R) available to a consumer is $500, write thelinear budget equation and solve for Y in terms of X and find what is the valueof the intercept term and the slope coefficient respectively in that order inthis budget equation?

Back 13

A. 100 and 4 100%

Front 14

Theequation of a price line is given by M = Px . X + Py .Y, where the variable Mrepresents the available income (budget) constraint, X is the quantity of goodX, Px is the price of good x, Y is the quantity of goody Y and Py is the priceof good Y . Solving this equation for Y in terms of X, what are the slope andintercept coefficients respectively in that order in this equation?

Back 14

A. (Px/Py)and (M/Py)

Front 15

Considerthe attached table which gives information about daily labor requirementcoefficients for producing two goods, Oranges and Grapes, in two nations,Canada and Chile. Following Adam Smith’s absolute advantage theory of trade,which of the following would be true about trade patterns of the two countries? Country Oranges (O) Grapes (G) Canada 0.1 0.55 Chile 0.23 0.18

Back 15

Chilewill export grapes and import orangesCanadawill export oranges and import grapes

Front 16

Theinternational trade model differs from a purely domestic trade model because ofwhich of the following?

Back 16

Differencesin the laws and regulations across nations

Differencesin currencies across nationsDifferencesin tastes and preferences of citizens across nations

Front 17

UnderRicardo’s theory, the PPF curve is a straight line because of which of thefollowing critical assumption(s)?

Back 17

B. Labor isthe only resource and is homogenous within a nation 100%

Front 18

UnderRicardo’s theory of trade based on comparative advantage, which of thefollowing would be true?

Back 18

ThePPF curve would be a straight line

Opentrade would result in complete specialization

Front 19

Whichof the following could be possible shapes of the production possibilitiesFrontier (PPF)?

Back 19

Downslopingand Straight line

Downslopingand Convex

Downslopingand Concave

Front 20

Whichof the following could be possible shapes of the price lines under normalassumptions of given income and given commodity prices?

Back 20

C. Downslopingand Straight line 100%

Front 21

Inthe attached diagram, two indifference curves cross each other. In this casewhich of the following assumptions have been violated?

Back 21

A. Transivity

Front 22

Inthe attached diagram representing indifference curves for a nation, what is theMRS between bundles H and F and between bundles F and G respectively in thatorder on IC1?

Back 22

C. 20 and 16 100%

Front 23

Inthe attached diagram, two parallel price lines are drawn. Write the equationfor the price line Pw2 with y expressed in terms of X?

Back 23

B. y = 1500– 2X 100%

Front 24

Inthe attached diagram representing two PPF curves, one for Switzerland and theother for Brazil for two products Candy (C) and Granola (G). Which of the followingworld price (Pw) ratio in terms of units of Granola to be given up for one unitof Candy that will be beneficial to both countries given the domestic pre-tradeopportunity cost (MRT) ratios of two countries?

Back 24

E. 1C =1.25G 100%

Front 25

Inthe attached diagram, panel (a) gives the autarky and trade solution for Braziland panel (b) gives autarky and trade solution for Canada for two goods Wheat(W) and Soybean (S). Assume Brazil has comparative advantage in Soybean andCanada in Wheat. What are the export and import quantities for Canada once opentrade takes place along the world price line?

Back 25

A. ExportWheat = 1600 and import Soybean = 800 100%

Front 26

Inthe attached diagram, panel (a) gives the autarky and trade solution for Braziland panel (b) gives autarky and trade solution for Canada for two goods Wheat(W) and Soybean (S). Assume Brazil has comparative advantage in Soybean andCanada in Wheat. What is the trade triangle for Brazil?

Back 26

B. ∆RNQ

Front 27

Inthe attached diagram, panel (a) gives the autarky and trade solution for Braziland panel (b) gives autarky and trade solution for Canada for two goods Wheat(W) and Soybean (S). Assume Brazil has comparative advantage in Soybean andCanada in Wheat. What are the consumption gains under open trade compared tothe autarky solution for Brazil?

Back 27

B. Wheat+800 and Soybean +200

Front 28

Theacronym WSF stands for what and its position on further Globalization:

Back 28

C. WorldSocial Forum and opposes further globalization 100%

Front 29

TheWorld Social Forum (WSF) generally meets annually in Davos, Sweden.

Back 29

FALSE

Front 30

Sincethe establishment of the WTO, which of the following negotiations has beenundertaken as part of the WTO negotiations but not of GATT negotiations?

Back 30

D. The DohaRound 100%

Front 31

TheDoha Round of trade negotiations are being undertaken as part of the WTOnegotiations but not of the GATT negotiations.

Back 31

TRUE

Front 32

TheWTO preceded the GAT framework.

Back 32

FALSE

Front 33

Inthe past, both the GATT and the WTO followed the non-discrimination principleknown as the Generalized System of Preferences (GSP).

Back 33

FALSE

Front 34

Considerfour products listed in the attached Table. A country imports these fourproducts only. What is the simple average tariff rate for this country inpercent (%) form? Item TariffRate (%) Import Value (m. US$) Bicycles 20 20 Cars 35 180 Parts and Components for cars andbicycles 5 40 Garments 50 80 Total (All Products) 320

Back 34

B. About27.50% 100%

Front 35

Considerfour products listed in the attached Table. A country imports these fourproducts only. What is the weighted average tariff rate for this country inpercent (%) form? Item TariffRate (%) Import Value (m. US$) Bicycles 20 20 Cars 35 180 Parts and Components for cars andbicycles 5 40 Garments 50 80 Total (All Products) 320

Back 35

C. About34.06% 100%

Front 36

Considerfour products listed in the attached Table. A country imports these fourproducts only. If Bicycle is a finished good and it can be made by using parts andcomponents made at home or imported components from overseas. The world priceof Bicycle is US$ 2,000.00 each and the world price (cost) of parts andcomponents that goes into each unit of the Bicycle production is US$ 1,000.00The home producer who produces the same type of Bicycles imports parts andcomponents from overseas and pays the above mentioned tariff rate on importedcomponents, what is the effective tariff rate protection (ERP) received by thehome Bicycle producers of this country? Item TariffRate (%) Import Value (m. US$) Bicycles 20 20 Cars 35 180 Parts and Components for cars andbicycles 5 40 Garments 50 80 Total (All Products) 320

Back 36

C. About35.00% 100%

Front 37

Withthe coefficient ai = 0.80, nominal tariff rate on imported inputs at ti=0%, andnominal tariff rate on imported finished good t=30%, what is the effectivetariff rate (g) expressed in % form?

Back 37

E. 150.00%

Front 38

Forany given value of ai >0 coefficient, if nominal tariff rate on importedfinished good (t) and the nominal tariff rate imported inputs (ti) are suchthat t < ti, which of the following would be true about the effective tariffrate g?

Back 38

C. g < 0 100%

Front 39

Ifthe US is imposing a lower tariff rate of 5% on imported raw materials, a moderaterate of 10% on imported semi-processed goods, and a much higher 30% rate onimported finished good, this tariff structure would represent which of thefollowing types of tariff?

Back 39

C. Advalorem but cascading tariff structure 100%

Front 40

If a tariff structure is such thatthe nominal tariff rate increases with the degree of processing of the importedgood, that tariff structure is known as which of the following?

Back 40

A. Escalatingtariff structure 100%

Front 41

Ifa tariff structure is such that a fixed tax is imposed per unit plus a % of thevalue of the import good, that tariff structure is known as which of thefollowing?

Back 41

B. Compoundtariff structure 100%

Front 42

Thecountry named Jingoland imports only three goods and charges different advalorem nominal tariff rates as given in the attached table along with thequantity of each item imported. Given this information, what is the weightedaverage and the simple (unweighted) average nominal tariff rates respectivelyin that order imposed by Joingoland (Hint: select the closest possible answer)? Product Nominal Tariff Rate (%) ImportQuantity (m. units) Sugar 15 50 Banana 25 20 Machines 45 10

Back 42

B. 21.25%and 28.33% 100%

Front 43

Thecountry named Jingoland imports only three goods and charges different advalorem nominal tariff rates as given in the attached table along with thequantity of each item imported. Given this information, the simple average islower than the weighted average tariff rate in Jingoland. Product Nominal Tariff Rate (%) ImportQuantity (m. units) Sugar 15 50 Banana 25 20 Machines 45 10FALSE

Back 43

FALSE

Front 44

InIslam (2000) article “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, which of the following method is used to determinecomparative advantage in U.S. agricultural products?

Back 44

D. BelaBalassa’s relative export and import ratios 100%

Front 45

Accordingto Islam (2000) article, “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, The U.S. has trade deficits with which of the followingcountries?

Back 45

BrazilChinaJapan

Front 46

Accordingto the Islam (2000) article, “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, a country will have comparative advantage in a productif:

Back 46

Exportratio > Import ratio

NetExport Import Ratio > 0

Front 47

Accordingto Islam (2010) article on “US Trade with India”, lukewarm reforms known as“Reform by Reluctance” in India began around which time period?

Back 47

B. Post mid1980’s 100%

Front 48

The“Cold War” between the U.S. and the former USSR officially ended during whichtime period?

Back 48

B. In 1989with the Fall of the Berlin Wall 100%

Front 49

Ifa U.S. domestic industry is injured by import surges, and it is suspected thatthe injury is caused by foreign countries dumping their products into the U.S.markets, then the U.S. can use which of the following tools as most relevant toprotect against foreign dumping?

Back 49

B. TheAntidumping duties

Front 50

Ifthe U.S. wants to help some poor countries by granting them granting themfavorable market access into the U.S. by giving preferential tariffs, this isknown as which of the following?

Back 50

E. TheGeneralized System of Preferences 100%

Front 51

Whichone from the following list are used by the U.S. least frequently asprotectionist tools to protect U.S. industries against foreign competition.

Back 51

C. TradeEmbargoes 100%

Front 52

TheSmoot Hawley Act was passed and signed into law under which of the followingU.S. Presidents?

Back 52

Hoover

Front 53

The1930 Smoot Hawley Act led reduced trade barriers and increased global tradeflows.

Back 53

FALSE

Front 54

In1988, the U.S. listed three countries under the “Super 3001” trade provision ofthe Omnibus Trade and Competitiveness Act of 1988. Which countries were they?

Back 54

B. Brazil,India, and Japan

Front 55

Accordingto Islam (2010) article on “US Trade with India”, the so-called “Hindu growthrate” refers to which of the following?

Back 55

C. Pre-liberalizationslow growth rates of around 3.5 per year

Front 56

Inthe attached graph, what is the estimated value of Producer Surplus under theautarky solution?

Back 56

B. $1,000million

Front 57

Inthe attached graph, what is the estimated value of Producer Surplus under theautarky solution?

Back 57

A. $500million

Front 58

Accordingto the Islam (2000) article, “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, which of the following products were found to haverevealed comparative advantage for the U.S.?

Back 58

E. Allexcept (d) above 100%

Front 59

Accordingto the Islam (2000) article, “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, the U.S. has revealed comparative advantage inagricultural feeds and dairy products.

Back 59

TRUE

Front 60

Accordingto the Islam (2000) article, “Comparative Advantage and Trade Balance in U.S.Agricultural Products”, voluntary trade will have which of the followingeffects?

Back 60

B. Benefitsall parties but the benefits may not be shared equally 100%

Front 61

Withthe coefficient ai = 0.80, nominal tariff rate on imported inputs at ti=0%, andnominal tariff rate on imported finished good t=30%, what is the effectivetariff rate (g) expressed in % form?

Back 61

E. 150.00%

Front 62

Inthe attached Figure, if quota price is Pq, which of the following is true ofarea a?

Back 62

B. Gain todomestic producers but loss to domestic consumers

Front 63

Inthe attached Figure, if quota price in Pq and the free trade price is Pw, whatis the estimated value of consumer surplus under free trade solution?

Back 63

E. $18,000million

Front 64

Inthe attached Figure, if quota price in Pq and the free trade price is Pw, whichof the following would be true of area (b+d) if the country moves away fromfree trade solution and adopts a quota solution?

Back 64

A. Loss todomestic consumers but captured by no one in society

Front 65

Inthe attached Figure, if quota price in Pq and the free trade price is Pw, whicharea represents the deadweight social loss (DSL) if the country moves away fromfree trade solution and adopts a quota solution?

Back 65

D. Area(b+d) 100%

Front 66

Whichof the following countries are participating in the 2009 global climate changesummit?

Back 66

Bangladesh,Maldives, and Myanmar

China,India, and Brazil

TheEU countries

TheU.S.

Front 67

Therich perpetrator countries are demanding from other rich victim countries inthe climate change summit significant amount of Financial Compensation to dealwith mitigation and adjustments needed to deal with the adverse effects of theclimate change.

Back 67

FALSE

Front 68

Islamand Ahmed (1995) Study on Bangladesh imports found which of the followingvariables have had inelastic response on Bangladesh imports?

Back 68

Realincome variable

Relativeprice variable

Front 69

Islamand Hassan (2004) Study on Bangladesh imports found which of the followingvariables have had inelastic response on Bangladesh imports reported inequation (2)?

Back 69

A. Relativeprice variable (LPMCPI)

Front 70

Inthe attached diagram, Pw is the free trade price and Pt is the price undertariff solution. If tariff is removed in Candyland under a free tradeagreement, what is the estimated dollar value of tariff revenue loss sufferedby the domestic government due to tariff removal?

Back 70

C. $250.00million

Front 71

IfCandyland allows free trade on imports of candy from any foreign country , whatwill be the free trade price and the quantity of candy consumed respectively inthat order in Candyland under free trade solution?

Back 71

D. $75 and30 million Kg 100%

Front 72

Inthe attached diagram, Pw is the free trade price and Pt is the price undertariff solution. Find the price under autarky solution and then estimateddollar value of consumer surplus in Candyland under the autarky solution?

Back 72

C. $1,000.00million

Front 73

Inthe attached diagram, Pw is the free trade price and Pt is the price undertariff solution. If tariff is removed in Candyland under a free tradeagreement, what is the estimated dollar value of social welfare gain todomestic consumers due to tariff removal?

Back 73

B. $125.00million

Front 74

TheU.S. signed the free trade agreements NAFTA which can be classified asrepresenting the highest level of economic integration known as the EconomicUnion.

Back 74

B. Negativeeffect 100%

Front 75

Whatwas the tariff reduction schedule under NAFTA?

Back 75

D. Gradualreduction over a 15-year period

Front 76

Theattached diagram represents market for Sugar for a hypothetical country namedSugarland where Pw is the free trade price and Pt is the price under tariff. Iftariff is removed by Sugarland on sugar imports under an economic integrationagreement, which one of the following would represent the Social Welfare Gain(SWG) to the consumers of Sugarland due to the removal of tariffs?

Back 76

C. area b +area d

Front 77

Theattached diagram represents market for Sugar for a hypothetical country namedSugarland where Pw is the free trade price and Pt is the price under tariff. Iftariff is removed by Sugarland on sugar imports under an economic integrationagreement, which one of the following would represent the redistribution fromhome government to home consumers due to the removal of tariffs?

Back 77

A. area c

Front 78

Theattached diagram represents market for Sugar for a hypothetical country namedSugarland where Pw is the free trade price and Pt is the price under tariff. Iftariff is removed by Sugarland on sugar imports under an economic integrationagreement, which one of the following would represent total gain in consumersurplus with the removal of all tariffs with a free trade agreement?

Back 78

B. area a +area b + area c + area d

Front 79

Theattached diagram represents market for Sugar for a hypothetical country namedSugarland where Pw is the free trade price and Pt is the price under tariff. Iftariff is removed by Sugarland on sugar imports under an economic integrationagreement, which one of the following would be true of area c?

Back 79

C. Loss tohome government and gain to home consumers 100%

Front 80

Inthe Rahman and Islam (2006) paper on Bangladesh-US exchange rate and tradebalance, what are the main hypotheses studied and examined?

Back 80

S-curve

J-curve

Front 81

Inthe Rahman and Islam (2006) paper on Bangladesh-US exchange rate and tradebalance, the main relationships studied and examined involve Taka-dollarexchange rate and its impact on Bangladesh Indian trade disputes.

Back 81

FALSE

Front 82

Acountry experienced a deterioration of trade balance in the short-run andfollowed by an improvement in the long-run in response to its currencydepreciation. This is consistent with the traditional hypotheses.

Back 82

FALSE

Front 83

Acountry experienced a deterioration of trade balance in the short-run andimprovement in the long-run in response to its currency depreciation. This isconsistent with which of the following hypotheses?

Back 83

A. J-curvehypothesis

Front 84

HowFDI (foreign Direct Investment) inflows are recorded in the balance of paymentsaccounting for the FDI source (originating) country?

Back 84

C. As debitin the capital and financial account 100%

Front 85

Howthe service imports are recorded in the balance of payments accounting for theimporting nation?

Back 85

D. As debitin the current account 100%

Front 86

Paymentfor international shipping and insurance services are recorded in the currentaccount of the balance of payments of a nation.

Back 86

TRUE

Front 87

Howthe unilateral grants from private citizens made to another country arerecorded in the balance of payments accounting for the source (originating)nation?

Back 87

D. As debitin the current account

Front 88

AmandaJones, a U.S. college student, went to Germany to study medicine for fiveyears. Each year, she spends about 20,000 USD as expenses for tuition, room andboard, food, books, instruments, and other misc expenses while studying inGermany. Of this amount, about 5,000 USD are covered from a scholarship fromGerman Government. How Amanda’s expenses will be entered in the German balanceof payments accounting for a given year?

Back 88

D. $15,000credit in the German current account 100%

Front 89

MicrosoftCorporation, a U.S. based multinational company, invested two billion USD in anR&D project in India to develop software for the company. The company isreceiving about 20 million USD return on its Indian investments that are sentback to the U.S. How these transactions are recorded in the Indian balance ofpayments?

Back 89

E. $2billion credit in the capital and financial account and $20 million debit inthe current account

Front 90

Theattached table gives information about a hypothetical country Bingoland’sbalance of payments transaction information. What is the Bingoland’s balance onthe goods and services account? Transaction Description Value (billion. US dollars) Imports of goods and services 680 Income inflows 50 Income outflows 20 Exports of goods and services 550 Inflows of private and governmentunilateral grants 10 Inflows of foreign investments 200 Outflows of private and publicunilateral grants 40 Outflows of foreign investments 100 Statistical discrepancy 10 Official settlement balance ? Overall balance in the balance of payments ?

Back 90

E. -$130billion 100%

Front 91

Theattached table gives information about a hypothetical country Bingoland’sbalance of payments transaction information. What is the Bingoland’s balance onthe income flows account? Transaction Description Value (billion. US dollars) Imports of goods and services 680 Income inflows 50 Income outflows 20 Exports of goods and services 550 Inflows of private and governmentunilateral grants 10 Inflows of foreign investments 200 Outflows of private and publicunilateral grants 40 Outflows of foreign investments 100 Statistical discrepancy 10 Official settlement balance ? Overall balance in the balance of payments ?

Back 91

C. +$30billion 100%

Front 92

Whichof the following are considered as part of the reforms of the external sectorsof the Bangladesh’s economy?

Back 92

C. Gradualopening-up of the economy to more foreign investments and exports

Front 93

Whichof the following markets represent the largest market in the world in terms ofthe value of transactions conducted per a given time period in the worldmarkets?

Back 93

D. The worldcurrency markets

Front 94

Theterm “foreign exchange market” refers to which of the following?

Back 94

C. Themarket at which foreign currencies are traded and currency exchange rates aredetermined

Front 95

WhenEuro was introduced late 1990’s, it was at a par, that is 1$ = 1 €. The mostrecent current rate is approximately 1$ = 0.74 €. Based on the aboveinformation, the Euro Zone export goods would be less competitive in the USmarket.

Back 95

TRUE

Front 96

Inrecent years, Bangladeshi Taka (Tk) exchanges against the US $ at the rate of68 Tk = 1$, Indian Rupees (Rs) exchanges against the US $ at the rate of Rs 45= 1 $, and the Japanese Yen (¥) exchanges against US $ at the rate of ¥ 95 =1$. What would be the exchange rate in terms of the Indian Rs. price of oneBangladeshi Tk?

Back 96

B. 0.66

Front 97

Inthe attached diagram, if the Japanese demand for US dollar increases from D2 toD3, what will be the impact on the Japanese Yen price of US dollar?

Back 97

A. Yen priceof dollar will increase 100%

Front 98

Whichof the following are the benefits of globalization?

Back 98

Increasedtrade flows

Increasedspecialization in production

Front 99

Globalizationhas:

Back 99

Createscosts and adverse effects

Providesgreater opportunities

Createsexposure to greater costs

Providesbenefits