ECON 3500 - Chapter 1

For the 70 years preceding 1994, international trade policies have been governed

by an international treaty known as the General Agreement on Tariffs and Trade (GATT)

The study of exchange rate determination is a relatively new part of international economics, since,

for much of the past century, exchange rates were fixed by government action.

International economics can be divided into two broad sub-fields

international trade and international money

After WWII, the United States had pursued a broad policy of

removing barriers to international trade

The balance of payments has become a central issue for the United States because...

the U.S. has run huge trade deficits in every year since 1982

In 1999, demonstrators representing a mix of traditional and new ideologies disrupted a major international trade meeting in the Seattle of

the WTO

Since 1994, trade rules have been enforced by

the WTO

The international debt crisis of early 1982 was precipitated when _______ could not pay its international debts

Mexico

The insight that patterns of trade are primarily determined by international differences in labor productivity was first proposed by...

David Ricardo

Which of the following does not belong to any trade agreement? -non-tariff barriers -NAFTA -WTO -Uruguay Round -The major free trade agreements of the 1990's

NAFTA

True or False: "Trade is generally harmful if there are large disparities between countries in wages."

This is generally false

The international capital market is

a set of arrangements by which individuals and firms exchange money for promises to pay in the future

In 1998, an economic and financial crisis in South Korea caused it to experience

a surplus in their balance of payments

International Economics ________ use the same fundamental methods of analysis as other branches of economics, because

does, the motives and behavior of individuals are the same in international trade as they are in the domestic transactions

The distinction between international trade and international money is not entirely clear because

most international trade involves monetary transactions