Worksheet #1 ECO334

Name some goods or services that are: -traded internationally. -not traded internationally. Why not?

-traded internationally. Oranges, wine, clothes, financial instruments, cars, etc. -not traded internationally. Why not? Haircuts, milk, culture-specific items, etc.

Which of the following analyzes the basis for and gains from trade?

International trade theory

Even though trade is important for both large and small countries it is much more important for a smaller country than a larger one. Explain.

Larger countries like the USA have a large internal market which allows their firms to become large enough to enjoy economies of scale. They also will have more and a variety of resources. Small countries do not have a lot of resources and at the same time their internal market is small. So smaller countries have a lot at stake compared to the larger countries when it comes to trade.

Which of the following Geneva based international organization sets the rules of trade between nations, implements new trade agreements and settles trade disputes between member countries

World Trade Organization (WTO)

Suppose the US implements a trade policy that produces an increase in imports. a) What special-interest groups in the US will most likely gain from the increased imports? b) What special-interest groups in the US will most likely lose from the increased imports?

a) What special-interest groups in the US will most likely gain from the increased imports? -Consumers, some specific industries that rely on imported raw materials and parts b) What special-interest groups in the US will most likely lose from the increased imports? -Specific industries which produce similar output, workers in these industries

An increase in the dollar price of a foreign currency usually:

benefits U.S. exporters

The most effective trade policy would be _______________, which allows each nation to specialize in efficient production of commodities.

free trade

When interest rates increase in the United States, capital flows from abroad will:

increase

The anti-globalization movement blames globalization for

increasing income inequalities in the world child labor environmental pollution

A rough measure of the degree of economic interdependence of a nation is given by:

the ratio of a nation's imports and exports to its GDP