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INT711S- INTERNATIONAL TRADE- 1ST OPP- JUNE 2023 |
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n Am I BI A u n IVE Rs ITY
OF SCIEn CE Ano TECHn OLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ECONOMICS
QUALIFICATION CODE: 12BECO
LEVEL: 7
COURSE CODE: INT711S
COURSE NAME: INTERNATIONAL TRADE
SESSION: MAY/JUNE 2023
DURATION: 3 HOURS
PAPER: THEORY
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S)
MR EDEN TATE SHIPANGA
MODERATOR:
MR IMMANUEL NASHIVELA
INSTRUCTIONS
1. Answer ALL questions.
2. Write clearly and neatly.
3. Number the answers clearly.
PERMISSIBLE MATERIALS
1. PEN,
2. PENCIL
3. CALCULATOR
THIS QUESTION PAPER CONSISTS OF 4 PAGES (Including this front page)
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SECTIOAN: MULTIPLE-CHOIQCEUESTIONS
[20 MARKS]
Writeonlythe numberandthe letter representingyour choicein capsi.e.,1.A,2. 8 3. C4. D etc.
1. Mercantilism
a) Isthe philosophyof free internationaltrade.
b) Wasa systemof export promotionandbarriers to imports practicedby governments.
c) WaspraisedbyAdamSmithin TheWealthof Nations.
d) Both(a) and (c).
2. Whichof the following statementswould a mercantilistnot agreewith?
a) Imports are desirable.
b) Tradeis a zero-sumactivity.
c) Thepurposeof trade is to amassrevenuesfrom exports.
d) A countrycanbenefit by grantingmonopolyrights to individuals.
3. Theinstitutionalframework developedin 1947to promotetrade liberalizationis knownas
a) the WTO
b) the GATT
c) the IMF
d) the World Bank
4. Accordingto the theory of comparativeadvantagew, hich of the following is not a reasonwhy
countries trade?
a) Comparativeadvantage.
b) Costsare higher in onecountrythan in another.
c) Theproductivityof labor differs acrosscountriesandindustries.
d) Exportsgive a countrya political advantageover other countriesthat export less.
5. Whenseveral countriesjointly imposecommonexternaltariffs, eliminatetariffs on eachother,
and eliminatebarriers to the movementof labor and capitalamongthemselves,they have
formed a/an
a) free trade area
b) customsunion
c) commonmarket
d) economicunion
6. A tariff can
a) never
b) sometimes
c) always
d) Permanently
raise a country'swelfare
7. Whichroundof internationaltrade negotiationsresultedin the creationof the WorldTrade
Organization?
a) KennedyRoundof 1964-1967b.
b) TokyoRoundof 1973-1979
c) UruguayRoundof 1986-1993
d) DohaRoundof 2003-2007
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8. Accordingto the theory of comparativeadvantagea, countrywill export a goodonly if:
a) Its productivityis higher in producingthe goodthanthe productivityof other countriesin
producingit.
b) Its wagerate in producingthe goodis lower than in other countries.
c) Its cost of producingthe good,relative to other goods,is at least as low as in other countries.
d) All of the above.
9. Tradecreationtakes placewhen
a) a countrymovesfrom autarkyto free trade
b) a movementto a customsunionreducesthe costsof trade throughstandardization
c) economicintegration results in a movementin productoriginto a lower-cost membercountry
d) economicintegration results in a shift in productorigin from a lower-cost, nonmembercountry
to a membercountry havinghigher costs
10. Accordingto the theory of comparativeadvantagec, ountriesgainfrom trade because
a) Trademakesfirms behavemore competitively,reducingtheir market power.
b) Outputper worker in eachfirm increases.
c) Worldoutputcan rise when eachcountryspecializesin what it doesrelatively best.
d) Everycountryhasan absoluteadvantagein producingsomething.
SECTIOBN:TRUEORFALSE
[20.MARKS]
1. TheTheoryof AbsoluteAdvantageholdsthat nationscan increasetheir economicwell-being by
specializingin the productionof goodsthey producemoreefficientlythan anyoneelse.
2. TheStolpher-Samuelsontheory analyzesthe incomedistributioneffectsof trade in the short
run,when resourcesare immobileamongindustries.
3. A country'stransactionswith the rest of the world are recordedin the balanceof payment.
4. A nationwishingto reduceits current accountdeficitwould be advisedto engagein more
governmentspending.
5. A tax of 20 percentper unit of importedgarlic is an exampleof a(n)ad valoremtariff.
6. A current accountsurplus impliesthat the countryis a net lenderto the rest of the world
7. Quotasare government-imposedlimits onthe price of goodstrade betweencountries.
8. Theinstitutionalframework developedin 1947to promotetrade liberalizationis knownasthe
WTO.
9. Absoluteadvantageis the ability of a country,individual,companyor regionto producea goodor
serviceat a lower cost per unit than the costat whichanyother entity producesthat samegood
or service.
10. Multilateral trade meansonecountrycomesinto trade with morethan onecountry.
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SECTIOCN:STRUCTUREQDUESTIONS
[60 MARKS]
QUESTIO1N
[Total:30]
1. Multinational Corporations are sometimes regarded as 'international cockroaches'. Do you·
agree/concurwith this statement?Motivateyour position.
(15)
2. Analyzethe possibleeffects of the impositionof a tariff in the context of a small country, on all
stakeholders,by makinguseof an appropriatediagram.
(15)
QUESTIO2N
[Total:30]
TheImitation Lag Hypothesisrelaxesthe assumptionin the Heckscher-Ohlinanalysisthat the same
technologyis availableeverywhere.It assumesthat there is a delayin the transmissionor diffusion
of technologyfrom onecountryto another.Explainthis hypothesisin full.
(15)
2 The Product-Cycle-Theorybuilds on the Imitation Lag Hypothesisalthough it is more completein
treatment of trade patterns. Discuss the three stages of the new product and its impact on
international trade
(15)
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