国际经济学(英)复习准备

Part I. Multiple choice（Please choose one right answer and fill it into the bracket，60%）

（ ）1.International economics deals with:

A. the flow of goods, services, and payments among nations

B. policies directed at regulating the flow of goods, services, and payments

C. the effects of policies on the welfare of the nation

D. all of the above

（ ）2.Which of the following is least likely a component of the current account?

A. Government transfers

B. Payments for direct investment

C. Payments for goods

D. Payments for services

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（ ）3.An increase in the U.S. dollar price of a foreign currency usually:

A. benefit U.S. importers

B. benefits U.S. exporters

C. benefit both U.S. importers and U.S. exporters

D. harms both U.S. importers and U.S. exporters

（ ）4. An investor in the Unitied States finds a direct quotation for the U.S. dollar-euro exchange rate and an indirect quotation for the U.S. dollar-British pound exchange rate. For this investor, in which of these quotations is the U.S. dollar the base currency?

A. Both of these quotations

B. The direct quotation

C. The indirect quotation

D. Official quotation

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（ ）5. The Mercantilists did not advocate:

A. free trade

B. stimulating the nation’s exports

C. restricting the nations’ imports

D. the accumulation of gold by the nation

（ ）6.Accroding to Adam Smith, international trade was based on:

A. absolute advantage

B. comparative advantage

C. both absolute and comparative advantage

D. neither absolute nor comparative advantage

（ ）7. Consider the following foreign exchange and interest rate information:

➢ Spot rate: 1.3382 USD/EUR

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➢ One year riskless USD rate = 2.5%

➢ One year riskless EUR rate = 3.5%

The one-year arbitrage-free forward exchange rate is closest to:

A. 1.2391 USD/EUR

B. 1.3728 USD/EUR

C. 1.3513 USD/EUR

D. 1.3253 USD/EUR

( ) 8. The source of comparative advantage, according to the Heckscher-Ohlin model of international trade, is each country’s:

A. Labor productivity

B. Available natural resources

C. Relative amounts of labor and capital

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D. Available human resource

（ ）9. The commodity in which the nation has the smallest absolute disadvantage is the commodity of its:

A. absolute disadvantage

B. absolute advantage

C. comparative disadvantage

D. comparative advantage

( ) 10. Ricardo explained the law of comparative advantage on the basis of:

A. the labor theory of value

B. the opportunity cost theory

C. the law of diminishing returns

D. all of the above

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( ) 11. Which of the following statements is true?

A. The combined demand for each commodity by the two nations is negatively sloped

B. the combined supply for each commodity by the two nations is rising stepwise

C. the equilibrium relative commodity price for each commodity with trade is given by the intersection of the demand and supply of each commodity by the two nations

D. all of the above

( )12. A production frontier that is concave from the origin indicates that the nation incurs increasing opportunity costs in the production of:

A. commodity X only

B. commodity Y only

C. both commodities

D. neither commodity

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( ) 13. The marginal rate of transformation (MRT) of X for Y refers to:

A. the amount of Y that a nation must give up to produce each additional unit of X

B. the opportunity cost of X

C. the absolute slope of the production frontier at the point of production

D. all of the above

( ) 14. Which of the following is not a reason for increasing opportunity costs:

A. technology differs among nations

B. factors of production are not homogeneous

C. factors of production are not used in the same fixed proportion in the production of all commodities

D. for the nation to produce more of a commodity, it must use resources that are less and less suited in the production of the commodity

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( )15. Community indifference curves:

A. are negatively sloped

B. are convex to the origin

C. should not cross

D. all of the above

( ) 16. The marginal rate of substitution (MRS) of X for Y in consumption refers to the:

A. amount of X that a nation must give up for one extra unit of Y and still remain on the same indifference curve

B. amount of Y that a nation must give up for one extra unit of X and still remain on the same indifference curve

C. amount of X that a nation must give up for one extra unit of Y to reach a higher indifference curve

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D. amount of Y that a nation must give up for one extra unit of X to reach a higher indifference curve

( ) 17. Which of the following statements is true with respect to the MRS of X for Y?

A. It is given by the absolute slope of the indifference curve

B. declines as the nation moves down an indifference curve

C. rises as the nation moves up an indifference curve

. all of the above

( ) 18. Which of the following statements about community indifference curves is true?

A. They are entirely unrelated to individuals' community indifference curves

B. they cross, they cannot be used in the analysis

C. the problems arising from intersecting community indifference curves can be

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overcome by the application of the compensation principle

D. all of the above.

( ) 19. Which of the following statements is false?

A. The gains from trade can be broken down into the gains from exchange and the gains from specialization

B. gains from exchange result even without specialization

C. gains from specialization result even without exchange

D. none of the above

( ) 20. At a relative commodity price above equilibrium

A. the excess demand for a commodity exceeds the excess supply of the commodity

B. the quantity demanded of imports exceeds the quantity supplied of exports

C. the commodity price will fall

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D. all of the above

( ) 21. The offer curve of a nation shows:

A. the supply of a nation's imports

B. the demand for a nation's exports

C. the trade partner's demand for imports and supply of exports

D. the nation's demand for imports and supply of exports

( ) 22. Which of the following statements regarding partial equilibrium analysis is false?

A. It relies on traditional demand and supply curves

B. it isolates for study one market

C. it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade

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D. none of the above

( ) 23. A deterioration of a nation's terms of trade causes the nation's welfare to:

A. deteriorate

B. improve

C. remain unchanged

D. any of the above

( ) 24. The H-O model extends the classical trade model by:

A. explaining the basis for comparative advantage

B. examining the effect of trade on factor prices

C. both A and B

D. neither A nor B

( ) 25. A difference in relative commodity prices between nations can be based on

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a difference in:

A. technology

B. factor endowments

C. tastes

D. all of the above

( ) 26. In the H-O model, international trade is based mostly on a difference in:

A. technology

B. factor endowments

C. economies of scale

D. tastes

( ) 27. According to the H-O model, trade reduces international differences in:

A. relative but not absolute factor prices

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B. absolute but not relative factor prices

C. both relative and absolute factor prices

D. neither relative nor absolute factor prices

( ) 28. The H-O model is a general equilibrium model because it deals with:

A. production in both nations

B. consumption in both nations

C. trade between the two nations

D. all of the above

( ) 29. From empirical studies, we conclude that the H-O theory:

A. must be rejected

B. must be accepted without reservations

C. can be accepted while waiting further testing

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D. explains all international trade

( ) 30. Relaxing the assumptions on which the Heckscher-Ohlin theory rests:

A. leads to rejection of the theory

B. leaves the theory unaffected

C. requires complementary trade theories

D. any of the above.

( ) 31. Which of the following assumptions of the Heckscher-Ohlin theory, when relaxed, require new trade theories?

A. Economies of scale

B. incomplete specialization

C. similar tastes in both nations

D. the existence of transportation costs

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( ) 32. International trade can be based on economies of scale even if both nations have identical:

A. factor endowments

B. tastes

C. technology

D. all of the above

( ) 33. Which of the following statements is incorrect?

A. An ad valorem tariff is expressed as a percentage of the value of the traded commodity

B. A specific tariff is expressed as a fixed sum of the value of the traded commodity.

C. Export tariffs are prohibited by the U.S. Constitution

D. The U.S. uses exclusively the specific tariff

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( ) 34. If a small nation increases the tariff on its import commodity, its:

A. consumption of the commodity increases

B. production of the commodity decreases

C. imports of the commodity increase

D. none of the above

( ) 35.The increase in producer surplus when a small nation imposes a tariff is measured by the area:

A. to the left of the supply curve between the commodity price with and without the tariff

B. under the supply curve between the quantity produced with and without the tariff

C. under the demand curve between the commodity price with and without the tariff

D. none of the above.

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( ) 36. According to the Stolper-Samuelson theorem, the imposition of a tariff by a nation:

A. increases the real return of the nation's abundant factor

B. increases the real return of the nation's scarce factor

C. reduces the real return of the nation's scarce factor

D. any of the above is possible

( ) 37. An import quota:

A. increases the domestic price of the imported commodity

B. reduces domestic consumption

C. increases domestic production

D. all of the above

( ) 38. An increase in the demand of the imported commodity subject to a given

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import quota:

A. reduces the domestic quantity demanded of the commodity

B. increases the domestic production of the commodity

C. reduces the domestic price of the commodity

D. reduces the producers' surplus

( ) 39. Adjustment to any shift in the domestic demand or supply of an importable commodity occurs:

A. in domestic price with an import quota

B. in the quantity of imports with a tariff

C. through the market mechanism with an import tariff but not with an import quota

D. all of the above

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( ) 40. An international cartel refers to:

A. dumping

B. an organization of exporters

C. an international commodity agreement

D. voluntary export restraints

( ) 41. Which of the following statements is correct?

A. In a customs union, member nations apply a uniform external tariff

B. in a free-trade area, member nations harmonize their monetary and fiscal policies

C. within a customs union there is unrestricted factor movement

D. a customs union is a higher form of economic integration than a common market

( ) 42. A customs union that allows for the free movement of labor and capital among its member nations is called a:

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A. preferential trade arrangement

B. free-trade area

C. common market

D. all of the above

( ) 43. A trade-creating customs union is one where:

A. lower-cost imports from outside the customs union are replaced by higher-cost imports from a union member

B. some domestic production in a member nation is replaced by lower-cost imports from another member nation

C. trade among members increases but trade with nonmembers decreases

D. trade among members decreases while trade with nonmembers increases

( ) 44. A trade-diverting customs union:

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A. increases trade among union members and with nonmember nations

B. reduces trade among union members and with nonmember nations

C. increases trade among members but reduces trade with non-members

D. reduces trade among union members but increases it with nonmembers

( ) 45. Which of the following is false?

A. A credit transaction leads to a payment from foreigners

B. A debit transaction leads to a payment to foreigners

C. A credit transaction is entered with a negative sign

D. Double-entry bookkeeping refers to each transaction entered twice.

( ) 46. Which of the following is a debit?

A. The export of goods

B. The export of services

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C. Unilateral transfers given to foreigners

D. Capital inflows

( ) 47. Capital inflows:

A. refer to an increase in foreign assets in the nation

B. refer to a reduction in the nation's assets abroad

C. lead to a payment from foreigners

D. all of the above

( ) 48. When a U.S. firm imports goods to be paid in three months the U.S. credits:

A. the current account

B. unilateral transfers

C. capital

D. official reserves

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( ) 49. An increase in the pound price of the dollar represents:

A. an appreciation of the dollar

B. a depreciation of the dollar

C. an appreciation of the pound

D. a devaluation of the dollar

( ) 50. A change from $1=€1 to $2=€1 represents

A. depreciation of the dollar

B. an appreciation of the dollar

C. a depreciation of the pound

D. none of the above

Part II. Calculation（15%）

The calculation of cross rate

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The price of one Gucci handbag is 70,000.00 yen in Tokyo Japan. As we know the exchange rate between Yen and U.S. Dollar is ¥103/$. What is the price of this bag valued by RMB，when the exchange rate between RMB and U.S.dollar is￥6.2/$？ （5%）

1. Answer: (5%)

The cross rate between Yen and RMB

¥103/$÷￥6.2/$=¥16.61/￥(2%)

¥70000÷¥16.61/￥=￥4213.59(2%)

So the handbag valued in RMB is ￥4213.59(1%).

Or

The handbag valued by U.S.dollar

¥70000÷¥103/$=$679.61(2%)

$679.61×￥6.2/$=￥4213.59(2%)

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So the handbag valued in RMB is ￥4213.59(1%).

2. The following rates currently exist: (5%)

Spot exchange rate $1.000/€

Annual interest rate on 180-day euro-denominated bonds:3%

Annual interest rate on 180-day U.S. dollar-denominated bonds: 8%

If uncovered interest parity holds, what is the eex (Expected exchange rate) which investors expect?

What is likely to be the effect on the new spot exchange rate if the interest rate on 180-day dollar-denominated bonds increases to 12%?

A. The interest rate on 180-day euro-denominated bonds is 3%/2=1.5% (1%)

The interest rate on 180-day U.S. dollar-denominated bonds is 8%/2=4% (1%)

eex ($/€)=$1.000/€*(1+4%)/(1+1.5%)= $1.0246/€ (2%)

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So the expected exchange rate is $1.0246/€.

B. The interest rate on 180-day U.S. dollar-denominated bonds is 12%/2=6% (1%)

e，($/€)=$1.0246/€*(1+1.5%)/(1+6%)= $0.9811/€ (2%)

So the expected exchange rate is $0.9811/€.

3. The current spot exchange rate is $1.2/ €. The current 360-day forward exchange rate is $1.18/ €. If the spot rate to be $1.22/ € in 360 days. (5%)

Could you tell me that the percentage change of euro, based on the 360-day forward exchange rate of $1.18/ €?

Is the Euro forward premium or forward discount, according to the forward contract?

If the spot rate were $1.22/ € in the 360 days, would the value of Euro depreciate or appreciate?

A. F=$1.18/ €

S=$1.2/ €

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Change(%€)= (F-S)/S=($1.18/ €-$1.2/ €)÷$1.2/ €= -1.67% (2%)

B. Based on the result above, the euro is forward discount (1%)

C. Change(%€)=($1.22/ €-$1.2/ €)÷$1.2/ €=1.67% (1%)

The Euro currency would appreciate in the 360 days. (1%)

Part III. Terminology (15%)

1. Absolute Advantage (3%):

When one nation is more efficient than (or has an absolute advantage over) another in the production of one commodity but is less efficient than (or has an absolute disadvantage with respect to) the other nation in producing a second commodity, then both nations can gain by each specializing in the production of the commodity of its absolute advantage and exchanging part of its output with the other nation for the commodity of its absolute disadvantage.

2. The Marginal Rate of Transformation (3%):

The marginal rate of transformation of X for Y refers to the amount of Y that a

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nation must give up to produce each additional unit of X.

3. Nontariff barriers (3%):

One country government restrict or adjust the volume of its international trade activities to other nations by applying measures and restrictions (technology and green trade barriers) except for levying tariff

4. Constant returns to scale (3%):

Increasing the amount of labor and capital used in the production of any commodity will increase output of that commodity in the same proportion.

5. The Stopler-Samuelson Theorem (3%):

An increase in the relative price of a commodity raises the return or earning of the factor used intensively in the production of the commodity. Thus, the real return to the nation’s scarce factor of production will rise with the imposition of a tariff.

6. Eurocurrency (3%):

any foreign currency-denominated deposit or account a financial institution

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outside the country of the currency’s issuance.

7. Direct quotation (3%):

A foreign exchange rate quoted as the domestic currency per unit of the foreign currency

8. Forward exchange contract (3%):

an agreement to exchange one currency for another on some date in the future at a price set now

9. Flexible Exchange Rate (3%):

A monetary system allows the exchange rate to be determined by supply and demand.

10. Fixed Exchange Rate (3%):

It called a pegged exchange rate, is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value

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Part IV. Short answer questions (10%)

1. Please briefly illustrate Resulting Effects of Tariff (5%)

Consumption effect -Reduction in domestic consumption

Production effect -Expansion of domestic production

Trade effect -Decline in imports

Revenue effect -Revenue collected by the government

The more elastic the demand curve, the greater the consumption effect.

The more elastic the domestic supply curve, the greater the production effect.

The more elastic the demand and domestic supply curves, the greater the trade effect, and the smaller the revenue effect.

Consumer surplus is the difference between what consumers would be willing to pay and what they actually pay.

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Imposition of a tariff reduces consumer surplus.

Increase in producer surplus, or rent, is the payment that need not be made in the long run to induce domestic producers to supply additional goods with the tariff.

It Also called subsidy effect of tariff.

Tariff redistributes income -

From domestic consumers (who pay higher price for the commodity) to domestic producers (who receive the higher price)

From nation’s abundant factor (producing exports) to the scarce factor (producing imports).

This leads to inefficiencies, or protection costs (deadweight losses).

2. Please briefly illustrate four Participants at the foreign exchange market. (5%)

Those needing currency to fund transactions

Tourists, importers, exporters, investors, etc.

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Commercial banks

Serve as the clearinghouses for currency exchange

Foreign exchange brokers

Clearinghouse for surpluses and shortages between the commercial banks

Central banks

Buyer or seller of last resort in the foreign exchange market

3. Please briefly illustrate the Dumping and Export Subsidies. (5%)

Dumping-The export of a commodity at below cost, or the sale of a commodity at a lower price abroad than domestically.

Three types of dumping:

Persistent dumping is the continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market.

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Predatory dumping is the temporary sale of a commodity at below cost or a lower price abroad to drive foreign producers out of business.

Sporadic dumping is the occasional sale of a commodity at below cost or lower price abroad to unload surplus of the commodity without reducing domestic prices.

Export Subsidies-The granting of tax relief to exporters or subsidized loans to foreign buyers to stimulate a nation’s exports.

It can be regarded as a form of dumping.

Export subsidies are illegal by international agreement, but often used in disguised form.

4. Please briefly illustrate the reasons for Offshore Deposits expansion. (5%)

Interest rates on short term deposits abroad are often higher than domestic rates.

International corporations often find it convenient to hold balances abroad for short periods in currency they need for payments.

International corporations can overcome domestic credit restrictions by borrowing in

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the Eurocurrency market.

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