Time allowed : 1.5 hours
Instructions
Semester 1 2018 Page 1 of 9
CONFIDENTIAL EXAM PAPER This paper is not to be removed from the examination room.
Copyright By PowCoder代写 加微信 powcoder
Student ID No. : _______________________________________________________
Middle of Semester 1 – 2018 Examination
ECOS 3006 International Trade
1. This examination consists of two parts (A and B). Part A is worth 15 points. Part B is worth 20 points. The whole exam is worth 35 points.
2. Answer all 15 multiple choice questions in Part A by marking the computer cards provided. Unanswered, incorrect or multiple answers are given a mark of zero. Do not cross on the computer cards.
3. Answer part B in the space provided. Your answers should reflect your work. Answers with no explanation receive zero credit. Allocate your time wisely: do the questions that are easier for you first.
4. Programmable calculators are not allowed
5. Please check your examination paper is complete (9 pages) and indicate you have
done this by signing below.
6. I have checked the examination paper and affirm it is complete.
Date: _____________
Cloth Home 10
Foreign 60 3) Choose the correct answer:
a. b. c. d.
4) If a. b.
a. b. c. d.
Home has a comparative advantage in cloth.
Foreign has a comparative advantage in cloth.
Home has a comparative advantage in wheat.
Home has a comparative advantage in both products.
the world relative price of cloth (Pclothw / Pwheatw) equals 1/2
both countries could benefit from trade with each other.
neither country will want to export the good in which it enjoys comparative advantage.
Home can not benefit from trade.
Foreign can not benefit from trade.
the Foreign economy experienced a great improvement in production technologies, so that the unit labor requirement for cloth was reduced to 15, then Home could gain from trade by
exporting cloth.
exporting wheat.
exporting both and importing nothing. none of the above.
Semester 1 2018
Page 2 of 9
MULTIPLE CHOICE QUESTIONS ANSWER ALL 15 QUESTIONS BY MARKING THE COMPUTER CARDS PROVIDED
1) In the Heckscher-Ohlin model, the capital-intensive industry
a. always uses more capital than the labor-intensive industry.
b. never uses more capital than the labor-intensive industry.
c. uses less workers per unit of capital given any ratio of wages to the rental rate. d. none of the above.
2) The Stolper-Samuelson theorem predicts that when a labor-abundant country opens to trade
a. relative factor prices will not change much. b. the real wage will increase.
c. the real rental rate will increase.
d. none of the above.
Using the following information, answer questions 3)-5)
Labor Requirements to Produce One Unit
a. b. c. d.
a. b. c. d.
a. b. c. d.
a. b. c. d.
the product in which its
labor productivity is relatively low. labor productivity is relatively high. labor mobility is relatively low. labor mobility is relatively high.
the Specific Factors model, if the price of the capital intensive product rises, wages will
rise but by less than the price of the capital-intensive product.
rise by more than the rise in the price of the capital-intensive product. remain proportionally equal to the price of the capital-intensive product. fall, since higher prices cause less demand.
the Specific Factors model, if Australia has more land per worker, and Belgium has more capital per worker, then if trade were to open up between these two countries,
the real income of capital owners in Australia would rise. the real income of labor in Australia would clearly rise. the real income of labor in Belgium would clearly rise. the real income of landowners in Belgium would fall.
Japan is relatively capital rich and the United States is relatively land rich, then starting trade between these two countries in the short run will
lead to perfect specialization with Japan alone producing manufactures. create a world relative price of food that is lower than that of the U.S. raise the relative price of food in both countries.
None of the above.
Semester 1 2018 Page 3 of 9
6) According to the Ricardian model, a country will have a comparative advantage in
10) If Brazil receives new migrants (immigration increases the labor force), the specific-factors framework suggests businesses (factor owners) in Brazil will _______ and workers in Brazil will _______ .
a. be hurt; benefit b. benefit; be hurt c. be hurt; be hurt d. benefit; benefit
Semester 1 2018 Page 4 of 9
11) If Cuba is not involved in trade, the figure implies that Cuba should _______ when it is offered the opportunity to trade.
Quantity of Toasters
a. specialize in the production of toasters and export bicycles
b. specialize in the production of bicycles and import toasters
c. remain self-sufficient, refusing to export or import
d. specialize in the production of both goods
12) In this question the subscript (l) refers to lawnmowers, while the subscript (c) refers to clothes.
World Trade Price Line
Quantity of Bicycles
Home Country
MPLc=1 MPLl =2 L = 60
Foreign country
MPL*c=5 MPL*l=2 L* = 30
What is the no-trade relative price of clothes to lawnmowers in the Home country? a. 1/60
b. 60/1 = 60 c. 1⁄2
13) Consider the specific factors model. Suppose Canada has two specific factors – capital and land – which are used in the production of manufactured items and grain. If a move to free trade causes Canada to export grain, the value of Canadian wages in terms of grain will:
c. Remain unchanged. d. None of the above
14) Before trade, the wage-rental (w/r) ratio is lower in Pakistan than it is in the Philippines. If the conditions of the Heckscher-Ohlin model of trade are met, a movement from no trade to free trade implies that
a. Pakistan will export the labor-intensive good.
b. The Philippines will export the labor-intensive good.
c. The Philippines will export both labor- and capital-intensive good.
d. It is not possible to determine the direction of trade without more information.
Semester 1 2018 Page 5 of 9
15) To measure U.S. Effective Factors in the case of land, the appropriate measure is: a. (US Land Endowment)
b. (US Land Endowment)*(US land Productivity)
c. (US Land Endowment)/(Labor Endowment)
d. (US Land Endowment)/(Total Value of US non-Land Endowments)
Semester 1 2018 Page 6 of 9
ANSWERS WITHOUT EXPLANATION RECEIVE ZERO CREDIT
Assume that Vietnam is labor-abundant relative to the U.S. and the two countries decide to eliminate all trade barriers from a very high level. Shoes are labor-intensive and computers are capital-intensive.
1. (6 points) Using a graph of the production possibilities frontier, show the effect of opening to trade on production and consumption in Vietnam. What will happen to the relative price of the labor-intensive good? (put computers on the horizontal axis). Label exports and imports.
SHORT ANSWER QUESTIONS
Semester 1 2018 Page 7 of 9
2. (3 points) Suppose that Vietnam doubles in both population and capital. What would happen to the relative prices of both the goods (Pc/Ps) and the factor endowments (w/r) compared to your answer in II.1 above? Why? (No graph necessary.)
For questions 3-5 suppose that the United States conducts foreign direct investment in Vietnam.
3. (3 points) What would be the effect of the FDI on production, the rental rate and the wage (both real and nominal) in Vietnam in the long-run? How do you know (no graph or equations necessary)?
Semester 1 2018 Page 8 of 9
4. (4 points) What do you expect would happen to the rental rate on capital and the wage in Vietnam in the short-term, if we now consider manufactured goods (M) versus agricultural goods (A)? Explain using a graph or equations.
Semester 1 2018 Page 9 of 9
5. (4 points) Policymakers ask you whether the foreign direct investment harmed or helped the U.S. and Vietnam. What would you tell them? Use a graph to show gains or losses.
程序代写 CS代考 加微信: powcoder QQ: 1823890830 Email: powcoder@163.com