Econ exam 4

Which of the following is not an outcome of Bretton Woods Conference?

United Nations.

Horizontal integration refers to ______________________ .

opening up of production plants in different countries producing same or similar products.

Prebisch hypothesis refers to:

secular decline in terms of trade for developing countries.

In the US, legal migrants fill the shortage of ___________ work force and illegal migrants fill the shortage of _________ work force.

skilled, unskilled

Developing countries are afraid of FDI by multinational corporations (MNCs), because

some of the MNCs are pretty large relative to the GDP of the host country.

transfer pricing refers to

the artificial overpricing of components shipped to an affiliate in a higher tax nation.

An example of FDI is

GM plant in europe

___________________ policies seek to promote rapid industrialization by erecting high barriers against foreign goods to encourage domestic production.

Import substituting industrialization.

Suppose 100 ¥ (Japanese yen) = 1 US $ in 1984 and 150 ¥ (Japanese yen) = 1 US $ in 1985 onwards. Based on this information, ceteris-paribus (if everything else stays the same) from 1985 onwards

Japanese exports to the US are likely to be higher and imports from the US are likely to be lower.

One of the following transactions would appear on the credit side of the current account in the US balance of payments account:

Japanese tourists spend money in the US.

______________________ was established as a consequence of World War one.

League of Nations.

If US had a persistent current account deficit, it is likely the $ will

depreciate in value

The rarest migration pattern is for people to move permanently from ____________________ .

developed to developing

UNCTAD (headquarters: Geneva) represents collective interests of the

developing nations.

Which of the following is not an advantage of export oriented strategy?

domestic industries grow accustomed to protection from foreign trade and have an incentive to become more efficient.

A major reason for migration of academics in Great Britain to the US in the eighties was _____________

economic

General Agreement on Tariffs and Trade (GATT) dealt with issues relating to ____________, and the World Trade Organization can deal with issues relating to _________________ .

industrial products; agricultural products, industrial products, and services.

It was widely accepted that ________________ was the key to economic development theory of comparative advantage was considered to be ____________ for developing countries.

industrialization; not useful

According to "infant industry argument" as advocated by Hamilton and List,

infant or new industries cannot withstand competition from mature industries in the industrialized countries.

After World War Two,

large number of former colonies became independent countries

According to recent statistics, _________ percent of world population lives outside the country of their birth.

less than 5

According to Borjas's estimates, a foreign born worker is likely to receive a salary ___________ that earned by native born and the foreign born's salary is likely to be ________ than his/her productivity.

less than; lower

In the US, number of illegal migrants is ___________ than number of legal migrants and in the last 4 to 5 years most of the legal migrants are from ___________ .

less, asia

Recently, many developing countries throughout the world have begun to institute policies that seek to

liberalize international trade and foreign investments by lowering trade and other barriers.

Initially the developing countries believed in _____________ role of foreign trade and investments in economic developed and now they believe in the ___________ role of foreign trade and investments.

limted; beneficial

Japanese car manufacturer invested heavily in the US in eighties. This FDI can be classified as ___________ seeking and one of the major reasons for this FDI by Japan in US was ___________ .

market seeking; tariff jumping.

Brain drain refers to ________________________________________________ .

migration of skilled workers from developing to developed countries.

The experience of China and India shows that GDP and per capita GDP increased much faster when these countries ___________________________________ .

more open policies with respect to foreign trade and investments.

Since US has more migration of skilled workers relative to unskilled workers, we would expect tax revenue contribution of migrants to be _____________ welfare payments to migrants.

more than

National Treatment is an example of the principle of _______________, where ____________________ .

non-discrimination; foreign goods are treated no less favorably than domestically produced goods in a country.

Suppose the US capital account is in deficit. Thus

outflow of loans and foreign investments from the US must be greater than the inflow of loans and investments from rest of the world.

United States is a union of 50 states and it is an example of

perfect economic union

Trade relations among members of British Commonwealth is an example of

preferential trade arrangement

A customs union is likely to have higher welfare gains, when

production amongst members of the union is competitive rather than complementary.

In a country like the US, owners of business would ______________ labor migration and the workers in the US would ______________

support; oppose

In case of Bangladesh, Daewoo's agreement with Desh must have been _____________ by workers and ___________ by then existing producers of textiles.

supported; opposed.

Economists prefer ____________ barriers over ____________ barriers as they are ____________.

tariff; non-tariff; more transparent.

With the formation of European Union, US FDI in European has _____________ .

increased

One of the following transactions would appear on the debit side of the capital account in the US balance of payments account:

US citizens purchase German stocks.

Multi-Fibre Arrangement (MFA) signed in 1974 is an example of

VERs

Assume that the demand for US $ is downward sloping. An increase in supply (or a rightward shift of the supply curve) of US $ is likely to result in

depreciation of the US $.

A trade diverting customs union:

increases trade among union members and decreases trade with non-members.

Suppose that the China's BOP account shows a current account surplus of $880 billion and official reserve account is in balance. Then the __________________ account must show a _______________ .

capital; deficit

Countries like the US use ___________ to offset foreign export subsidies.

countervailing duties.

Migration of workers has a ______________ effect on wages and the income distribution between workers and owners of capital changes in favor of ______________.

dampening; owners of capital.

Which of the following statements is correct? -customs union permits free movement of labor and capital -in a customs union, member nations apply uniform external tariff -a customs union is a higher form of economic integration than the common market -in a free trade area, member nations harmonize their monetary and fiscal policies

in a customs union, member nations apply uniform external tariff

Suppose 100 ¥ (Japanese yen) = 1 US $ in 1984 and 150 ¥ (Japanese yen) = 1 US $ in 1985 onwards. Based on this information, as compared to 1984

¥ (Japanese yen) has depreciated in relation to the US $ from 1985 onwards.

Suppose 100 ¥ (Japanese yen) = 1 US $ in 1984 and 150 ¥ (Japanese yen) = 1 US $ in 1985 onwards. Based on the given information, ceteris-paribus (if everything else stays the same) from 1985 onwards

Americans are likely to invest more in Japan.

Medical tourism or education abroad is an example of

Consumption Abroad or Mode 2.

One of the major reasons for economic growth of East Asian countries (like Japan, South Korea, China) has been

efficiency seeking FDI.

Around the time of their independence, developing countries

exported agricultural and other nature based products and imported industrial products.

With the formation of NAFTA, US has gained in terms of larger market for

financial services

Countries like the US was able to economically develop during 19th to early part of 20th century primarily because of

foreign portfolio investment by Europeans.

Trade deflection (that is country imports a product to export it) is a problem associated with

free trade area

Fiscal policy is concerned with ___________ and monetary policy is concerned with _____________ .

government expenditures and taxes; money

It has been observed that consumers in European Union benefited from

greater competition and reaping benefits from economies of scale that led to decrease in average costs and prices.

Which is not a dynamic gain from the formation of customs union?

trade creation

An action like the Smoot Hawley Act is considered a ______________ and is ______________ to the principles of GATT or WTO.

unilateral; unacceptable

The US factor of production that is most likely to be made worse-off because of NAFTA is

unskilled workers

As a result of Smoot Hawley Act of 1930,

world trade collapsed.