4540 Final-Quiz questions

Quiz 9 diagram 2 The Nash equilibrium of the US/EU policy game generates firm profits of: a. 25,25 b. 20,90 c. 40,40 d. 90,20

a. 25,25

Quiz 9 diagram 1 If Airbus plays low output, Boeing will play high output, the payoffs to Boeing and Airbus respectively being: a. 90,20 b. 40,40 c. 60,60 d. 20,90

a. 90,20

quiz 9 diagram 2 The optimal strategy of the US and EU is to always choose: a. A subsidy for its firm b. No subsidy for its firm c. A subsidy one period and no subsidy the next d. None of the above

a. A subsidy for its firm

Between 1995 and 2008 global supply chains exhibited: a. An increasing share of value added for capital and high-skilled labor b. An increasing share of value-added for medium and low-skilled labor c. A decreasing share of value added for capital and low-skilled labor d. An increasing share of value added for high and low-skilled labor

a. An increasing share of value added for capital and high-skilled labor

Quiz 10 diagram Area C in the diagram is: a. An internal terms of trade gain to the customs union b. Deadweight loss to the customs union c. Lost tariff revenue to the customs union d. Trade creation for the customs union

a. An internal terms of trade gain to the customs union

Quiz 8 diagram When tariffs t1 and t2 are both cut: a. Country 2 expands its exports of x and its imports of y b. Country 2 expands its exports of y and its imports of x c. Country 2's trade volume remains constant d. None of the above

a. Country 2 expands its exports of x and its imports of y

If agricultural export subsidies were cut by the developed countries: a. Global agricultural commodity prices would increase b. Global agricultural commodity prices would fall c. Global agricultural commodity prices would remain constant d. Some global agricultural commodity prices would rise others would fall

a. Global agricultural commodity prices would increase

Quiz 8 diagram When tariffs t1 and t2 are both cut, in Country 1: a. Resources move from x to y production b. Resources do not move between x and y production c. Resources move from y to x production d. None of the above

a. Resources move from x to y production

"Factory Asia" led "race to the bottom" unilateralism: a. True b. False

a. True

After 50 years of trade liberalization under the GATT/WTO, it has been argued that developed countries are facing "globalization fatigue": a. True b. False

a. True

At the lower medium-skilled wage of w', outsourcing of O2O'2 will clear the market: a. True b. False

a. True

Emerging economies such as China and India are involved in outsourcing: a. True b. False

a. True

In his research, Rose (2004) found that there was no empirical evidence that the GATT/WTO has increased world trade: a. True b. False

a. True

WTO members have agreed that if another member(s) violates agreed trade rules, they should use the multilateral system of dispute settlement a.True b.False

a. True

With the advent of global supply chains, manufacturing has become more "fragmented" across countries: a. True b. False

a. True

Without the WTO to enforce the rules on use of export subsidies, the game between the US and EU has the structure of a Prisoner's Dilemma: a. True b. False

a. True

In the GATT/WTO, developing countries have historically received a "free pass" to tariff cuts under the Most Favored Nation clause: a. True b. False

a. true

quiz 11 diagram The initial medium-skilled wage bill in industry 1 is the area: a. w0 E0 S0 01 b. E0 w0 02 S0 c. w' F S0 01 d. F E' S'' S0

a. w0 E0 S0 01

Suppose the medium-skilled wage falls to w', but there is no possibility of outsourcing: a. Total excess demand for skilled labor is GF b. Total excess demand for labor is GE' c. Total excess demand for labor is FB d. Total excess demand for labor is GB

b. Total excess demand for labor is GE'

In its 2004 complaint to the WTO, the US claimed European Airbus received: a. $105 billion in launch aid b. $205 billion in launch aid c. $405 billion in launch aid d. $305 billion in launch aid

b. $205 billion in launch aid

Quiz 10 diagram The net effect of Spain and Portugal joining the EC is: a. (A+B+C+D) b. (C+D+J)-H c. (A+B+H+G) d. (G+H+G+C)

b. (C+D+J)-H

Using its global supply chain, Apple were grabbing: a. 25% of the US retail price of its iPod b. 36% of the US retail price of its iPod c. 90% of the US retail price of its iPod d. 50% of the US retail price of its iPod

b. 36% of the US retail price of its iPod

Trade diversion in the EU is where, for example: a. Cheaper imports by one group of EU countries from other EU countries are replaced by imports from the rest of the world b. Cheaper imports by one group of EU countries from the rest of the world are replaced by imports from other EU countries c. Imports by a group of EU countries are replaced by production in those countries d. Exports are mistakenly sent to the EU instead of NAFTA

b. Cheaper imports by one group of EU countries from the rest of the world are replaced by imports from other EU countries

If the two firms tried to form a cartel, each would have an incentive to: a. Choose low output b. Choose high output c. Choose low then high output d. Choose high then low output

b. Choose high output

The origin of service outsourcing was: a. Contracting out of design work by the German auto industry in the 1970s b. Contracting out of design work by the UK auto industry in the 1970s c. Contracting out of design work by the Italian auto industry in the 1970s d. Contracting out of design work by the Japanese auto industry in the 1970s

b. Contracting out of design work by the UK auto industry in the 1970s

Quiz 8 diagram If tariffs t1 and t2 were cut on goods x and y respectively, but not tariff t3, which country must be receiving special and differential treatment? a. Country 2 b. Country 3 c. Country 1 d. None of the three countries

b. Country 3

The net benefit of outsourcing of medium-skilled labor is given by: a. E0FE' b. E0FE' and E'AB c. E'AB d. None of the above

b. E0FE' and E'AB

NAFTA is a customs union: a. True b. False

b. False

Quiz 9 diagram 1 The optimal strategy of Boeing and Airbus is to both choose low output: a. True b. False

b. False

Timmer et al. (2012) found that the share of value-added taken by global value chains has not expanded over the period 1995-2008: a. True b. False

b. False

Quiz 10 diagram Trade diversion and trade creation are the areas: a. A and B b. H and D c. D and J d. B and C

b. H and D

Regional free trade agreements are: a. Not in conflict with any of the Articles of GATT/WTO b. In conflict with GATT Article I but are allowed under Article 24 c. Allowed under Article I, but not allowed under Article III d. Not allowed at all under the Articles of GATT/WTO

b. In conflict with GATT Article I but are allowed under Article 24

The key factors driving the formation of global supply chains are: a. Professor Michael Porter's books on the subject b. Information and communications technology and supply of unskilled labor in emerging economies c. Formation of regional trade agreements d. None of the above

b. Information and communications technology and supply of unskilled labor in emerging economies

In successive rulings in 2010/11 and 2011/12, the WTO has found with respect to European Airbus and Boeing that: a. The US is in breach of export subsidy rules b. The EU and US are in breach of export subsidy rules c. The EU is in breach of export subsidy rules d. None of the above

b. The EU and US are in breach of export subsidy rules

The GATT response to regionalism in the 1960s was: a. The Nixon Round b. The Kennedy Round c. The Johnson Round d. The Carter Round

b. The Kennedy Round

In connection to trade liberalization, Larry Summers was once quoted as saying: a. "...I only like multilateralism..." b. "...I really dislike regionalism..." c. "...I like all the 'isms', unilateralism, regionalism and multilateralism..." d. "...I think pluri-lateralism is the solution..."

c. "...I like all the 'isms', unilateralism, regionalism and multilateralism..."

Quiz 10 diagram Prior to Spain and Portugal joining the EC, the supply curve facing importers I is: a. EC b. EC' c. (EC+ER') d. (EC'+ER)

c. (EC+ER')

European and US use of support for wide-bodied jet aircraft first arose in: a. 1978 b. 1998 c. 1988 d. 2008

c. 1988

A US-EU bilateral deal on civil aircraft production existed between: a. 1982 and 2004 b. 2002 and 2004 c. 1992 and 2004 d. 1982 and 1992

c. 1992 and 2004

Currently, the US has regional trade agreements in force with: a. 10 countries b. 7 countries c. 20 countries d. 15 countries

c. 20 countries

Quiz 9 diagram 1 The Nash (dominant) equilibrium of the game generates firm profits of: a. 60, 60 b. 90,20 c. 40,40 d. 20,90

c. 40,40

Subramanian and Wei (2007) found that GATT/WTO membership has resulted in: a. A significant increase in trade for both developed and developing countries b. A significant decrease in trade for both developed and developing countries c. A significant increase in trade for developed countries but only modest gains for developing countries d. None of the above

c. A significant increase in trade for developed countries but only modest gains for developing countries

If the US and EU were to both take account of the impact of their policy choices on their terms of trade, they would: a. Choose the no subsidy strategy b. Choose the subsidy strategy c. Choose an export tax strategy d. None of the above

c. Choose an export tax strategy

Most observed service outsourcing has been between: a. English and French-speaking countries b. English and German-speaking countries c. English and English-speaking countries d. English and Spanish-speaking countries

c. English and English-speaking countries

Quiz 8 diagram Countries 2 and 3 have a comparative advantage in producing: a. Goods x and y b. Good y c. Good x d. Neither good x nor good y

c. Good x

If a WTO member does not comply with the finding against them by a dispute settlement panel, the WTO member who brought the case: a. Has to wait until the other member meets the panel ruling b. Refile the dispute case against the other member with the WTO c. Is authorized to retaliate against the other member d. None of the above

c. Is authorized to retaliate against the other member

The rise of offshoring has made the WTO: a. More attractive to developed countries b. About the same for developed countries c. Less attractive to developed countries d. None of the above

c. Less attractive to developed countries

Quiz 8 diagram If Country 1 can influence its terms of trade, the reduction in tariff t1: a. Raises domestic price of x and lowers world price of x b. Lowers domestic price of x and lowers world price of x c. Lowers domestic price of x and raises world price of x d. Domestic and world prices of x remain the same

c. Lowers domestic price of x and raises world price of x

Quiz 10 diagram After Spain and Portugal join the EC, imports by the EC become: a. M'=(MC+MR) b. M'=(MC'+MR) c. M'=(MC'+MR') d. M'=( MC+MR')

c. M'=(MC'+MR')

In order to resolve the WTO "latecomers problem", developed countries should: a. Just offer to cut their manufacturing tariffs b. Ask developing countries to cut their tariffs c. Offer to reduce their agricultural export subsidies d. None of the above

c. Offer to reduce their agricultural export subsidies

Outsourcing is expected to slow down in the next decade because: a. There is not enough bandwidth on the internet b. Congress will stop the internet being utilized to outsource US jobs c. The easiest jobs to outsource have already gone from the US d. US firms are scared of the NSA spying on their business

c. The easiest jobs to outsource have already gone from the US

Quiz 8 diagram If there is a balance of concessions in tariff cuts between Countries 1 and 2: a. The world price ratio for goods x and y increases b. The world price ratio for goods x and y falls c. The world price ratio for goods x and y remains constant d. None of the above

c. The world price ratio for goods x and y remains constant

Which of the following is not a regional trade agreement: a. NAFTA b. TPP c. UNCTAD d. EU

c. UNCTAD

quiz 11 diagram At the initial equilibrium medium-skilled wage, employment by industry 2 is: a. 01 to 02 b. 02 to S' c. 02 to S'' d. 02 to S0

d. 02 to S0

Quiz 9 diagram 2 If the US does not use a subsidy, the EU will use a subsidy, the payoffs to Boeing and Airbus respectively being: a. 40,40 b. 90,20 c. 25,25 d. 20,90

d. 20,90

The amount of international trade that currently occurs within global supply chains is: a. 10% b. 50% c. 35% d. 80%

d. 80%

In comparing a customs union with a free trade agreement, one can say that: a. Both have common external tariffs b. A free trade agreement sets common external tariffs c. Countries in a customs union have different external tariffs d. A customs union sets common external tariffs

d. A customs union sets common external tariffs

Quiz 10 diagram Prior to Spain and Portugal joining the EC, the tariff revenue on EC imports was made up of the following areas in the diagram: a. J+H b. A+B+C+D c. A+G+J d. A+B+H+G

d. A+B+H+G

In previous rounds of GATT, the sectors witnessing the least trade liberalization were: a. Textiles b. Clothing c. Agriculture d. All of the above

d. All of the above

Outsourcing has grown because of: a. Lower skilled labor costs overseas b. Better educated workers overseas c. Technological advances in computers and telecommunications d. All of the above

d. All of the above

The type of service jobs that have been outsourced include: a. Accounting b. Telephone call centers c. Computer programming d. All of the above

d. All of the above

The objective of special and differential treatment (SDT) has been for: a. Developed countries to gain market access to developing countries b. Developing countries to gain market access to developing countries c. Developed countries to gain market access to developed countries d. Developing countries to gain market access to developed countries

d. Developing countries to gain market access to developed countries

The area D2E0w0 is the initial return to: a. Skilled labor in industry 2 b. Skilled labor in industry 1 c. Capital in industry 1 d. Unskilled labor in industry 2

d. Unskilled labor in industry 2

Quiz 8 diagram When tariffs t1 and t2 are both cut, Country 3: a. Will likely export a lot more of x b. Will likely import more of x c. Will likely export more of x and y d. Will likely export some more of x

d. Will likely export some more of x