LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034 M.A. DEGREE EXAMINATION – ECONOMICS
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FIRST SEMESTER – NOV 2006
EC 1810 – INTERNATIONAL ECONOMICS
Date & Time : 04-11-2006/1.00-4.00 Dept. No. Max. : 100 Marks
Part – A
Answer any FIVE questions in about 75 words each. (5 x 4 = 20 marks)
- What is intra-industry trade and how is it measured?
- Explain Haberler’s opportunity cost theory.
- What is a Customs Union?
- State the Metzler paradox.
- What is a Currency Board Arrangement?
- Explain purchasing power parity theory.
- Differentiate between spot and forward exchange rates.
Part – B
Answer any FOUR questions in about 300 words each. (4 x 10 = 40 marks)
- Compare import tariffs with import quotas and voluntary export restraints.
- Discuss the salient features of the European Union.
- Examine strategic trade policy using Boeing and Airbus industry as suitable
examples.
- Explain the concept of balance of payments and identify the major components of
a nation’s BOP.
- Discuss the salient features of the World Trade Organization.
- Explain product cycle theory with suitable examples.
- Examine the IS-LM-BP model with flexible exchange rates and perfect capital
mobility.
Part – C
Answer any TWO questions in about 900 words each. (2 x 20 = 40 marks)
- Critically examine the factor endowments trade model developed by Heckscher-
Ohlin.
- Using the Ricardian theory of comparative advantage, show how mutually
beneficial trade is possible between two countries, though one of them may have
an absolute advantage in the production of all commodities.
- Show how internal and external balance could be achieved by using expenditure-
changing and expenditure-switching policies under a fixed exchange rate
model (SWAN model).
- Explain how a customs union contributes to trade creation and trade diversion.
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