Study Questions
国际贸易考试代做 Question 1. Give two reasons for the large current account deficits the United States had in the last 40 years. For each reason, give a one or two
Question 1.
Give two reasons for the large current account deficits the United States had in the last 40 years. For each reason, give a one or two sentence explanation of why this led to a current account deficit.
Question 2.
Fill in the following table, assuming the law of one price (PPP) prevails.
| Price in the United States
of a Sweater in Dollars ($) |
Price in Europe of a sweater in Euros (€) | Exchange Rate E€/$ (Euros per dollar) |
| 20 | 30 | |
| 30 | 1.20 | |
| 50 | 1.50 |
Question 3. 国际贸易考试代做
There are two countries, North and South, and two set of tasks, managerial tasks M and “maquila” tasks Ma that firms in each country combine to produce output Y. Firms have to allocate a fixed amount of labor to each activity: more labor allocated to “maquila” tasks take labor away from “managerial” tasks, and vice versa. Moreover, more labor into one task increases output Y at decreasing rates (law of diminishing returns applies). Assume that firms in the South export “maquila” tasks and firms in the North export managerial tasks.
a. Graph the PPF for a firm in the North under the assumptions above. Toward which set of tasks is this Northern firm’s PPF biased?
b. If the worldcost ratio of managerial to “maquila” tasks were Pm/Pma, show, on the graph above, how much managerial and “maquila” tasks a firm in the North would produce. Label these quantities q1mand q1ma.
c. Show how much managerial and “maquila” tasks the Northern firm needs to produce a level of output Y, on the graph above. Label these quantities d1mand d1ma. Draw as many isoquant curves as you need to.
d. Define the terms of tradeas the ratio of the cost of a firm’s exports to the price of a firm’s imports. If the world cost of “maquila” tasks decreases, show on the graph above how the Northern firm changes its need of managerial and “maquila” tasks. Label these quantities q2mand q2ma.
e. Show how much managerial and “maquila” tasks the Northern firm needs to produce output Ynow that the terms of trade have changed. Label these values d2mand d2ma. Draw as many isoquant curves as you need to.
f. Did the change in the North’s terms of trade increase, or decrease, welfare in the North? (HINT: remember that in this context we are measuring welfare by output.)
Question 4. 国际贸易考试代做
For each of the following examples, show how the U.S. balance of payments accounts are adjusted. State which accounts are adjusted, and by how much. Be sure to get the signs correct.
a. A U.S. tourist buys dinner ($150) at a restaurant in France with their Citibank credit card. Citibank deposits the cost of the dinner into the restaurant’s bank account.
b. A Canadian tourist buys a BU t-shirt ($20) online and pays with a check.
c. A U.S. investor buys a share of Deutsche Telekom, ($75) a German company, and pays with funds from his Bank of America checking account.
Question 5. 国际贸易考试代做
The national income accounting identity is , where is GDP, is consumption, is investment, is government expenditure, are exports, and are imports.
a. Define the current account.
CA = _____ _____
b. Define national savings.
S = _____ _____
c. Use the national income accounting identity to show that investment must be equal to savings in a closed economy. A closed economy has both exports and imports equal to zero.
d. Use the national income accounting identity to derive a similar expression for an open economy. That is, derive an expression for national savings when exports and imports are not zero.
e. In what way can an open economy save that a closed economy cannot?
Question 6.
Fill in the following table. The country’s net foreign wealth at the end of 1998 is -1000 billion dollars.
| Date | Current Account (bil. USD) | Home’s Net Foreign Wealth
(bil. USD) |
|
| 1999 | 250 | ||
| 2000 | -100 | ||
| 2001 | -150 | ||
| 2002 | 10 | ||
| 2003 | -50 | ||
| 2004 | 200 | ||
Question 7. 国际贸易考试代做
Heckscher-Ohlin Model and Intertemporal Trade. 15 POINTS. There are two countries, Brazil and Saudi Arabia, and two goods, consumption today (Cp) and consumption tomorrow (Cf). Assume Saudi Arabia “exports” current consumption”, and Brazil “exports” future consumption.
a）Which country is a net lender today? Net borrower today? What does that mean in terms of capital flows between these two countries today? And in terms of their current accounts today?
b）Graph the intertemporal production possibilities frontier for Brazil under the assumption above. Toward which good is Brazil’s PPF biased?
c）If the world interest rate were r, show, on the graph above, how much current consumption (Cp) and future consumption (Cf) Brazil would produce. Label these quantities q1p and q1f.
d）Show how much current consumption (Cp) and future consumption (Cf) Brazil consumes on the graph above. Label these quantities d1pand d1f. Draw as many indifference curves as you need to.
e）If the world interest rate increases, show, on the graph above, how the production of current consumption (Cp) and future consumption (Cf) would change in Brazil. Label these quantities q2pand q2f.
f）Show how much how much current consumption (Cp) and future consumption (Cf) Brazil consumes now that the world interest rate in higher (i.e. the “terms of trade” have deteriorated for Brazil). Label these quantities d2pand d2f. Draw as many indifference curves as you need to.
g）Did the change in the world interest rate, increase or decrease, welfare in Brazil?
h）What happened with the current account and net capital flows today in Brazil after the world interest rate increased?
Question 8. 国际贸易考试代做
Figure 1 shows the share of intra-firm imports into the United States (in total US imports), for the category “Bumpers” (HS 870810), across exporting countries.
Figure 1.
a. What is the intra-firm import share of “Bumpers” for China? For Slovakia?
b. State ONE reason why these two countries may have such a different intra-firm import share into the United States in “Bumpers”.
c. According to this measure of offshoring, does China have a low or high participation in the global value chain of the auto-part industry (HS 8708) — “Bumpers” is a subcategory of the auto-part industry? What is this measure missing (i.e., state ONE shortcoming of this measure if we want to capture global value chains in China)?
d. Define ONE alternative measure of offshoring that may capture better than the share of intra-firm trade the insertion of China in the global value chain. Should this alternative measure increase or decrease with offshoring? What would be the advantage of this alternative measure relative to intra-firm trade shares? Be precise.
e. A very well-established fact is that industries with higher capital-labor ratios have higher intra-firm trade shares. If the “Bumper” industry is an industry that uses capital intensively (relative to labor), according to the Heckscher-Ohlin theory of trade, what would the relation between the capital-labor ratio of China and Slovakia be?
e. Is the current account for the home country positive or negative in period ? Is the current account for the home country positive or negative in period ?
f. What is the pattern of comparative advantages in this two-country world? That is, which country is relatively better in producing goods today versus good tomorrow?
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