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Bus. 187 - Edfelt - Sample Exam Questions (Exam #1) (Circle the letter of the best single response, or respond or fill in the blanks, as appropriate)
1. Most world trade (exports, imports; monetary value) occurs a. between advanced industrial countries and lesser-developed countries (LDCs) b. between LDCs c. between advanced industrial countries d. between raw material exporters and manufactured goods exporters e. between oil producing and oil consuming countries
2. With respect to average annual growth rate of world output (gross world product, i.e., annual production of new goods and services) and of international trade and investment since WW II: a. international trade has grown more rapidly than international investment b. world production has grown more rapidly than international trade c. world production has grown more rapidly than international trade but less rapidly than international investment d. growth of trade and investment has been lower than it was between 1914 and 1945 e. world production has grown less rapidly than international trade and investment
3. The monetary value of global services exports: a. is about the same as for merchandise trade b. is more difficult to track than for merchandise trade c. has been gradually declining d. is classified as a "capital/financial account" transaction in balance-of-payments accounting e. is about double the value of merchandise exports
4. The broadest national balance-of-payments classifications, respectively, for trade and investment are: a. current account and capital/financial account b. merchandise trade and services accounts c. goods account and services account d. merchandise trade account and capital account e. foreign direct investment and foreign portfolio investment
5. The theory of "comparative advantage" holds that there is a basis for mutually beneficial trade when Country A: a. specializes in producing those goods and services that it can produce at a lower absolute cost than Country B b. seeks to reverse a balance-of-trade deficit with Country B c. specializes in producing products that it can produce more efficiently (relative to other products) without regard to whether country B can produce them at a lower absolute cost d. specializes in products with a high labor content in order to import products with less labor content e. reduces its tariff and non-tariff trade barriers
6. A description of the present international monetary system a. a free-floating system b. all currencies are pegged (fixed at a set price) to another currency or to a basket (group) of currencies c. some currencies are pegged and some float, but few stay fixed for long d. all currencies float within an agreed upon % range of one another e. all OECD currencies float freely while all others are fixed either to the euro or the U.S. dollar
7. With respect to forms of "regional economic integration": a. a "customs union" is more integrated than a "common market" b. a "free trade area" is more integrated than an "economic union" c. a common market is the most complete form of integration d. customs unions do not include free migration of people across member country borders e. monetary unions are the most common
8. Which of the following conclusions can be determined from the abbreviated foreign exchange chart below a. One Mexican
peso is worth more than one Chinese yuan c. The forward rate for the British pound indicates that its value will likely rise against the dollar in the weeks and months ahead d. All of the
above
9. If in the case
of the Danish krone, its Wednesday rate (priced in U.S. dollars) was higher
than for the previous day (Tuesday), this indicates that
10. Compute the price (either day) of the British pound in Brazilian reals (to the nearest whole real) using the preceding foreign-exchange chart. 11. (5 points) List five examples of "market-friendly (free-market) economic reforms" commonly recommended for emerging economies
12. (4 points) Name the pair of international financial institutions created during the late 1940s (headquartered in Washington DC). What has been the primary role of each?
13. (2 points) Distinguish between "ad valorem tariff" and "compound tariff."
14. (3 points) Foreign companies, individuals and governments currently have cumulative assets (direct, portfolio and other investment) in the U.S. of about ($200 billion ___, $6 trillion ___, $20 trillion ___), a total that is (greater than___, less than___, choose one) overall U.S. assets abroad. This puts the U.S. in the position of (choose one): creditor nation___, OECD nation___, most-favored nation___, protectionist nation___, debtor nation___
15. (4 points) A post-WWII multilateral forum (de-facto organization) for negotiating a reduction in international trade barriers was known as the __________________________________; it established a so-called _________________________________ clause whereby a tariff reduction extended by any member country to another was automatically extended to all the members; in 1995, the group was replaced by the _________________________________________________, whose current round of multilateral trade negotiations is known as the _________________ Round
16. Ten point essay question; please respond as thoroughly as possible and only within the space provided (limited to one side of one page); 9-10 pts (outstanding); 7-8 pts (above average); 5-6 pts (satisfactory); 0-4 pts (something important is missing); point deductions for incomplete, erroneous or irrelevant discussion
....Describe/discuss progress during the 20th century to reduce global barriers to trade. ANSWERS
11. See class notes (your own) from the Sept. 24, 2008 class meeting and Reader, p. 17 12. IMF & World Bank; see class notes (your own) for the September 17 & 24, 2008 class meetings and text pp. 17 & 299 13. See text, p. 187, Handout # 4 (yellow) in Reader, and class notes (your own) from the Sept. 10, 2008 class meeting 14. $20 trillion (see double-paged double-sided white handout, distributed in class, August 27, 2008); greater than; debtor 15. General Agreement on Tariffs and Trade (GATT); Most-Favored-Nation (MFN); WTO (World Trade Organization); Doha Round 16. See class notes (your own) for the September 10, 2008 class meeting, Reader pp. 2-5, Handout #4 (yellow, in Reader), and Text pp. 192-95 |