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Monetary & Global 1
Question | Answer |
---|---|
What is international trade? | The movement of goods and services across borders |
When a firm in an industrial country owns a plant in a developing country it is called: | Vertical FDI |
List the four cases of quota rents in a small country: | Auction quota, licensing, rent-seeking, voluntary export restraint |
What is the difference of exports and imports between two countries? | Bilateral Trade Balance |
What is a Free Trade area in which the countries also adopt identical tariffs between themselves and the rest of the world? | Customs Union |
What principle of GATT and WTO does a discriminatory country violate? | The Most Favored Nation Principle |
The WTO was established during what round of GATT? | The Uruguay Round |
What is a trade agreement between three or more countries? | Multilateral Trade Agreement |
What is a large country in international economics? | A country able to influence the world price of a good |
What country was the number 1 exporter of goods in 2012? | China - $2 trillion in goods |
On what date was the Smoot-Hawley Act signed into law? | June 1930 |
A restriction on the amount of goods that can be imported into a country | Import Quota |
What type of tariff maximizes the welfare for large country importer? | Optimal Tariff |
What is the optimal tariff for a small country? | 0 |
What can occur when a large country imposes an import tariff, but can never happen when a small country imposes an import tariff? | Net gain in welfare because the price changed by the exporter has fallen; terms-of-trade gain for the importer |
What was invented in 1956 that allowed goods to be moved by ships, rail, and trucks more cheaply than before? | Shipping Containers |
What route is shorter than the Suez Canal by 4,000 miles? | Northern Sea Route |
A product sold from one country to another | Export |
A product bought by one country from another | Import |
Countries that export more than they import, such as China in recent years | Trade surplus |
Countries that import more than they export, such as the United States | Trade Deficit |
Foods, feeds, beverages, and industrial supplies were ___% of imports in 1925, but represented ___% in 2010. | 90; 40 |
Capital plus consumer goods plus automobiles have increased from ___% of exports in 1925 to ___% in 2010. | 20;60 |
The largest amount of trade is the flow of goods within Europe, _____ trillion or ____% of world trade. | 3.9 trillion; 23% |
Why is trade between European countries high? | Import tariffs are low |
Give an example of a customs union | European Union |
Trade within the Americas is about ___ of trade within Europe, and about ___% of world trade. | 1/3; 8 |
The vast majority of trade in the America is within the _____ _____ ___ ____ ____, consisting of Canada, the United States, and Mexico. | North American Free Trade Agreement (NAFTA) |
What country performs a wide range of services such as accounting, customer service, computer programming, etc. for the United States? | India |
The value of all final goods produced in a year | Gross Domestic Product (GDP) |
All factors that influence the amount of goods and services shipped across international borders | Trade Barriers |
The period from 1890-WWI is referred to as | The Golden Age of International Trade |
During the "golden age" there was dramatic improvements in _____ which allowed for a great increase in the amount of international trade. | Transportation |
What act raised tariffs as high as 60%, and were applied by the US to protect farmers and other industries? | Smoot-Hawley Act |
The ____ reduced tariffs and caused an improvement in transportation costs. | General Agreement on Tariffs and Trade (GATT) |
The European Union consisted of ___ countries in western Europe prior to 2004. | 15 |
The majority of world flows of ____ ____ ___ occur between industrial countries. | Foreign Direct Investment |
When a firm from one industrial country owns a company in another industrial country. | Horizontal FDI |
When a developing country invests into a developed country. | Reverse vertical FDI |
The largest stocks of FDI are within _____. | Europe |
Was established to reduce trade barriers between nations | GATT |
Tariffs may be imposed in response to _____ trade practices such as dumping. | Unfair |
GATT/WTO is what type of trade agreement? | Multilateral |
How many countries are members of the WTO? | 120 |
When was the first time agriculture was included in trade negotiations? | GATT |
Why was the WTO created? | To settle disputes and review policy |
The ___ ___ (or escape clause) says if a country feels that it is being treated unfairly by another country, they can raise tariffs. | Safeguard Provision |
A group of countries voluntarily agree to remove trade barriers between themselves | Free trade areas |
Free trade areas in which the countries also adopt identical tariffs between themselves and the rest of the world | Customs Unions |
Article I of GATT | Most Favored Nation Principle |
The ratio of export prices to import prices | Terms of Trade |
The world's largest exporter of goods and services combined in 2012 | The United States |
An American tourist spends 100 euros on a visit to the Eiffel Tower. This amount is included in | France's service exports |
Total world trade flows in 2010 were: | 16.8 billion |
In 2010 the trade in goods between the United States and Canada amounted to: | 537 billion |
Differences in wages help explain why the U.S. imports a great deal from: | China |
The percent of world trade accounted for by Africa’s exports in 2000 was | 2% |
The establishment of a car production factory in China by General Motors. | Vertical FDI |
In 2010 Mexico had an FDI stock of | 265 billion |
The acquisition of IBM’s PC unit by China’s Lenovo Group is an example of: | Inflow of FDI into the US |
The purchase of Smithfield Foods in the United States by China is an example of a: | Reverse-vertical FDI |
Ford Motor Company’s acquisition of Jaguar. | FDI outflow from the US |
What is the largest trade flow? | International trade within Europe |
An import tariff imposed by a small country will cause the domestic price of the good to: | Rise by the amount of the tariff |
The welfare effects of the imposition of a tariff on an imported good in a small country include: | A rise in government revenue |
The net effect of an increase in tariffs on an imported good by a small country is: | A decrease in welfare |
When a small country imposes a tariff on an imported good, domestic consumers will buy less of the good while domestic firms will | Produce more of it |
An import tariff in a small country will cause consumer surplus to: | Decline |
An import tariff in a small country will cause producer surplus to: | Increase |
When a large country imposes an import tariff, the world price of the good will: | Decrease |
A primary reason for governments to impose tariffs on imports is: | To raise revenue |
In the case of a large country, the imposition of an import tariff is likely to cause the domestic price to: | Rise by less than the tariff |
A large–country government imposes a tariff on an imported good and its domestic price rises. The attendant welfare effects will include: | An increase in producer surplus |
The net effect of an import tariff on a country’s welfare is: | A possible increase if the country is large |
The effects of imposing an import quota include: | An increase in producer surplus |
When a small country imposes an import quota, the domestic price of the good will: | Increase |
Consider two alternative trade policies that reduce imports by the same amount: the imposition of an import quota and the imposition of an import tariff. The effect in the two cases is that the government will: | Earn zero revenue with the quota |
A small country that imposes a tariff will: | Always have a deadweight loss |
The imposition of an import tariff by a large country will cause its terms of trade to: | Increase |
The optimal tariff, i.e. the tariff that maximizes an importing country’s welfare, is: | Positive for a large country, zero for a small country |
The U.S. policy of imposing quotas on sugar imports has the effect of: | Raising the domestic price of sugar for consumers |
The U.S. Trade Act of 1974 describes conditions under which tariffs can be applied in the US, it mirrors the provisions of the GATT and WTO. 2 sections of the Trade Act deal with the use of “safeguard” tariffs, but only 1 applies to a single country | China |