LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.A. DEGREE EXAMINATION – ECONOMICS

RF 32

FIRST SEMESTER – APRIL 2006

                                                EC 1810 – INTERNATIONAL ECONOMICS

 

 

Date & Time : 28-04-2006/1.00-4.00 P.M.   Dept. No.                                                       Max. : 100 Marks

 

 

Part – A

Answer any FIVE questions in about 75 words each.           (5 x 4 = 20 marks)

1. What do the terms of trade measure? Define commodity terms of trade.
2. How is an economic union different from customs union?
3. What are the functions of the IMF?
4. What is a currency board arrangement?
5. Distinguish between flexible and fixed exchange rate.
6. a) If India imports Rs. 60 lacks worth of diamonds and exports Rs. 45 lakhs worth of diamonds in a year, estimate India’s intra-industry trade index for diamonds.
7. b) If India exports Rs. 50 lakhs worth of textiles and imports Rs. 50 lakhs worth of textiles in a year, estimate India’s intra-industry trade index for textiles.
8. The free trade price of an imported Ray Ban sunglasses in India is $100. If it is produced in India it requires $80 worth of imported components. India impose a 40 per cent nominal tariff on each imported Ray Ban sunglass but a 20 per cent nominal tariff on the imported components. Calculate the rate of effective protection for the domestic producers of sunglasses in India.

 

Part – B

 

Answer any FOUR questions in about 300 words each.       (4 x 10 = 40 marks)

8. Compare floating exchange rates with fixed exchange rates.
9. What is meant by SDR’s? Explain the adjustment mechanism under SDR scheme.
10. Discuss the activities of the World Bank.
11. Explain the major achievements of the Uruguay round of trade negotiations under the GATT.
12. Explain the Stolper-Samuelson theorem.
13. Assume that D_x, S_x and P_x = $1 under free trade. Analyse the partial equilibrium effects of an import quota of 30_x if D_x shifts down to in such a way that is parallel to D_x and crosses S_x at P_x = $2.50.
14. Assume the labour productivity for wheat and cloth in the US and UK are as follows:

            Commodity                             US                   UK

Wheat (bushels / man hour)           6                      1

Cloth (yards / man hour)                4                      2

 

Assume the wage rate in the US is $6 per man hour and in the UK its is £1 per man hour. If the exchange rate is £1 = $3 who gains and who loses? At what rate of exchange will there be mutual gain?

Part – C

 

Answer any TWO questions in about 900 words each.         (2 x 20 = 40 marks)

15. State the product cycle theory of trade and explain how overlapping demands between countries could lead to international trade.
16. Explain how capital movements bring about equilibrium in the balance of payments.
17. Discuss Jacob Veiner’s model of trade creation and trade diversion involving a customs union.
18. Examine the Ricardian theory of comparative cost advantage and Haberler’s rehabilitation of this theory.

 

 

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             LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034  M.A. DEGREE EXAMINATION – ECONOMICS

AN 21

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)

1. What is intra-industry trade and how is it measured?
2. Explain Haberler’s opportunity cost theory.
3. What is a Customs Union?
4. State the Metzler paradox.
5. What is a Currency Board Arrangement?
6. Explain purchasing power parity theory.
7. Differentiate between spot and forward exchange rates.

 

Part – B

 

Answer any FOUR questions in about 300 words each.            (4 x 10 = 40 marks)

8. Compare import tariffs with import quotas and voluntary export restraints.
9. Discuss the salient features of the European Union.
10. Examine strategic trade policy using Boeing and Airbus industry as suitable

examples.

11. Explain the concept of balance of payments and identify the major components of

a nation’s BOP.

12. Discuss the salient features of the World Trade Organization.
13. Explain product cycle theory with suitable examples.
14. 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)

15. Critically examine the factor endowments trade model developed by Heckscher-

Ohlin.

16. 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.

17. 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).

18. Explain how a customs union contributes to trade creation and trade diversion.

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

RF 28

M.A. DEGREE EXAMINATION – ECONOMICS

FIRST SEMESTER – APRIL 2007

EC 1810 – INTERNATIONAL ECONOMICS

 

 

 

Date & Time: 02/05/2007 / 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)

1. What are offer curves?
2. Explain the concept of terms of trade.
3. Define the concept of balance of payments
4. What is a Euro Currency market?
5. How are import tariffs different from import quotas?
6. Explain the theory of tariff structure.
7. Mention the features of the gold standard.

 

Part – B

 

Answer any FOUR questions in about 300 words each.               (4 x 10 = 40 marks)

8. Explain Stolper-Samuelson theorem using the Edgeworth box diagram.
9. Differentiate between a free trade area, a customs union and an economic union.
10. Show how equilibrium is established in the foreign exchange market.
11. Distinguish between a Currency Board Arrangement and Dollarisation.
12. What is Dumping? Explain the various kinds of dumping.
13. Differentiate between currency forwards and currency futures.
14. Examine strategic trade policy using Boeing and Airbus industry as suitable

example.

 

Part – C

 

Answer any TWO questions in about 900 words each.                 (2 x 20 = 40 marks)

15. Critically examine the Ricardian theory of comparative advantantage. How did

Haberler resurrect this model?

16. Discuss the Heckscher-Ohlin model of international trade. What did Leontief

discover by testing this model empirically?

17. Explain product cycle and imitation gap theories using suitable examples.
18. Explain Jacob Viner’s theory of the customs union and show how it contributes to

trade creation and trade diversion.

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

BC 33

M.A. DEGREE EXAMINATION – ECONOMICS

FIRST SEMESTER – APRIL 2008

    EC 1810 – INTERNATIONAL ECONOMICS

 

 

 

Date : 03/05/2008            Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

PART- A               (5 X 4 = 20 marks)

 

 

Answer any FIVE questions in 75 words each. Each question carries FOUR marks.

 

1. What is an exchange rate? How are cross exchange rates calculated?

 

2. Mention the various types of dumping practiced internationally.

 

3. What are Special Drawing Rights?

 

4. The current annual interest rate in India is 9% while it is 4% in the UK. The spot rupee-pound exchange rate is Rs.82: £1. Price a one-year forward contract for the rupee-pound exchange rate.

 

5. The commodity terms of trade for the following countries are measured taking 2000 as the base year equal to 100. In the year 2005, the terms of trade for Japan, Germany, United States and United Kingdom were 94.8, 91.2, 96.6 and 108.4 respectively. Assuming that there is no change in the index of export prices for Japan and Germany and the index of import prices for the US and UK between 2000 and 2005, estimate the index of import prices for Japan and Germany and the index of export prices for the US and UK.

 

6. The free trade price of an imported Nokia cellphone in India is $100. If it is produced in India it requires $80 worth of imported components. India imposes a 25 per cent nominal tariff on each imported Nokia cellphone but a 10 per cent nominal tariff on the imported components. Calculate the rate of effective protection provided to domestic manufacturers of cellphones in India.

 

7. What is Dollarisation?

 

PART- B            (4 X 10 = 40 marks)

 

 

 Answer any FOUR questions in 300 words each. Each question carries TEN marks.

 

 

8. Draw a figure showing that even if two nations have identical factor endowments,

technology and tastes, there is still a basis for mutually advantageous trade

between them, if they face decreasing costs in the production of more wheat or

more cloth.

 

9. Discuss the salient features of the World Trade Organization.

 

 

 

10. Explain with the help of a diagram how a BOP deficit could be corrected through an exchange rate change in the form of a depreciation or devaluation.

 

11. Three multinational car manufacturers, Mercedes Benz, BMW and Volkswagen, are planning to sell assembled models of luxury cars, priced between Rs.35 lakhs and Rs.45 lakhs in the Indian market. Explain the theory that supports their current business moves.

 

12. Differentiate between import tariffs, import quotas and voluntary export restraints.

 

13. Mention the various components of a nation’s balance of payments. Why is the single entry, Errors and Omissions, often required in a nation’s balance of payments?

 

14. The consumers in the UK are willing to pay a maximum price of £4 for a leather handbag. At the free trade price of £1 for each handbag, 70 handbags are demanded locally. If the UK imposes a 100 per cent tariff on each imported handbag, estimate the reduction in consumer’s surplus, the gains to the local producers of handbags, the gains to the British government, and the deadweight loss to British society.

 

 

PART- C             (2 X 20 = 40 marks)

 

 

Answer any TWO questions in 1200 words each. Each question carries TWENTY marks.

 

 

15. What are offer curves? Derive equilibrium terms of trade between the US and the UK using offer curves.

 

16. Explain Jacob Viner’s theory of the customs union to show how a customs union contributes to trade creation and trade diversion.

 

17. Explain the Stolper-Samuelson theorem using the Edgeworth box diagram.

 

18. Can a nation that is less efficient than another in the production of all commodities export anything to the latter? Give empirical proof in support of your arguments.

 

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.A. DEGREE EXAMINATION – ECONOMICS

FIRST SEMESTER – NOVEMBER 2010

    EC 1810  – INTERNATIONAL ECONOMICS

 

 

 

Date : 11-11-10                 Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

                                                                     PART- A                                                       (5 X 4 = 20 marks)

 

 

Answer any FIVE questions in 75 words each. Each question carries FOUR marks.

 

 

1. Define income terms of trade.

 

1. What is an exchange rate? How are cross exchange rates calculated?

 

1. Mention the features of a currency option.

 

1. What is an imitation gap?

 

1. Differentiate between a free trade area and a customs union.

 

1. Define the term “dumping”.

 

1. What is a currency swap?

 

 

PART- B                                                       (4 X 10 = 40 marks)

 

 

 Answer any FOUR questions in 300 words each. Each question carries TEN marks.

 

 

1. State Haberler’s opportunity cost theory using an appropriate example.

 

1. The consumers in the UK are willing to pay a maximum price of £4.5 for a T-shirt. Assume the local market for this product clears at £3 and 30 T-shirts. At the free trade price of £1 for each T-shirt, 70 T-shirts are demanded locally. If the UK imposes a 100 per cent import tariff on each T-shirt, estimate the reduction in consumer’s surplus, the gains to British producers and the UK government, and the deadweight loss to British society as a result of this tariff.

 

1. Using a suitable diagram, suggest an appropriate fiscal and monetary policy mix for the following macroeconomic conditions: i) unemployment, BOP surplus;               ii) inflation, BOP surplus;   iii) inflation, BOP deficit;   iv) unemployment, BOP deficit.

 

1. Differentiate between import tariffs, import quotas and voluntary export restraints.

 

1. Briefly discuss the Heckscher-Ohlin trade model.

 

1. Mention the various components of a nation’s balance of payments. Why is the single entry, ‘Errors and Omissions’, often required in a nation’s balance of payments?

 

1. With reference to the following table, determine if trade will be mutually beneficial for India and the US if the exchange rate was Rs.40:$1 or Rs.50:$1 or Rs.60:$1 and if one hour of labour time costs $6 in the US and Rs.100 in India.

 

 

Commodity	U.S.	India
Wheat (bushels/man-hour)	6	1
Cloth (yards/man-hour)	4	2

 

 

 

 

PART- C                                       (2 X 20 = 40 marks)

 

 

Answer any TWO questions in 1200 words each. Each question carries TWENTY marks.

 

 

1. With the help of the SWAN model, show how internal and external balance could be achieved simultaneously under a fixed exchange rate regime.

 

1. Explain the Stolper-Samuelson theorem and show how the Metzler paradox is an exception to this theorem.

 

1. Explain the Ricardian theory of international trade using suitable examples.

 

1. Derive equilibrium terms of trade between any two countries using offer curves.

 

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.A. DEGREE EXAMINATION – ECONOMICS

FIRST SEMESTER – APRIL 2012

EC 1810 – INTERNATIONAL ECONOMICS

 

 

Date : 03-05-2012             Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

 

                                  PART- A                                                           (5 X 4 = 20 marks)

 

 

Answer any FIVE questions in 75 words each. Each question carries FOUR marks:

 

 

1. Define income terms of trade.

 

1. What is an exchange rate? How are cross exchange rates calculated?

 

1. Mention the features of a currency option.

 

1. What is an imitation gap?

 

1. Differentiate between a free trade area and a customs union.

 

1. Define the term “dumping”.

 

1. What is a currency swap?

 

 

PART- B                                               (4 X 10 = 40 marks)

 

 

 Answer any FOUR questions in 300 words each. Each question carries TEN marks:

 

 

1. State Haberler’s opportunity cost theory using an appropriate example.

 

1. The consumers in the UK are willing to pay a maximum price of £4.5 for a T-shirt. Assume the local market for this product clears at £3 and 30 T-shirts. At the free trade price of £1 for each T-shirt, 70 T-shirts are demanded locally. If the UK imposes a 100 per cent import tariff on each T-shirt, estimate the reduction in consumer’s surplus, the gains to British producers and the UK government, and the deadweight loss to British society as a result of this tariff.

 

1. Using a suitable diagram, suggest an appropriate fiscal and monetary policy mix for the following macroeconomic conditions: i) unemployment, BOP surplus;               ii) inflation, BOP surplus;   iii) inflation, BOP deficit;   iv) unemployment, BOP deficit.

 

1. Differentiate between import tariffs, import quotas and voluntary export restraints.

 

1. Briefly discuss the Heckscher-Ohlin trade model.

 

1. Mention the various components of a nation’s balance of payments. Why is the single entry, ‘Errors and Omissions’, often required in a nation’s balance of payments?

 

1. With reference to the following table, determine if trade will be mutually beneficial for India and the US if the exchange rate was Rs.40:$1 or Rs.50:$1 or Rs.60:$1 and if one hour of labour time costs $6 in the US and Rs.100 in India.

 

 

Commodity	U.S.	India
Wheat (bushels/man-hour)	6	1
Cloth (yards/man-hour)	4	2

 

 

 

 

PART- C                                                (2 X 20 = 40 marks)

 

 

Answer any TWO questions in 1200 words each. Each question carries TWENTY Marks:

 

 

1. With the help of the SWAN model, show how internal and external balance could be achieved simultaneously under a fixed exchange rate regime.

 

1. Explain the Stolper-Samuelson theorem and show how the Metzler paradox is an exception to this theorem.

 

1. Explain the Ricardian theory of international trade using suitable examples.

 

1. Derive equilibrium terms of trade between any two countries using offer curves.

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.A. DEGREE EXAMINATION – ECONOMICS

FIRST SEMESTER – NOVEMBER 2012

EC 1810 – INTERNATIONAL ECONOMICS

 

 

Date : 15/11/2012            Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

                                                                         PART- A                                                (5 X 4 = 20 marks)

 

 

Answer any FIVE questions in 75 words each. Each question carries FOUR marks.

 

 

1. State the law of comparative advantage as enunciated by Ricardo.

 

1. How does a customs union differ from a free trade area?

 

1. Define income terms of trade and commodity terms of trade.

 

1. The current short term interest rate in India is 4% while it is 1% in the UK. The spot rupee-pound exchange rate is Rs.79.74: £1. Price a 3 month and a 6 month forward contract for the rupee-pound exchange rate.

 

1. If a country exports $40 million in textiles per year and imports $10 million in textiles per year, estimate the country’s intra-industry trade index for textiles. Explain the significance of this index having a value of either zero or one.

 

1. The free trade price of an imported leather jacket in France is €100. If it is produced locally it requires € 70 worth of imported components. France imposes a 20 per cent nominal tariff on each imported leather jacket but a 5 per cent nominal tariff on the imported components. Calculate the rate of effective protection provided to domestic manufacturers of leather jackets in France.

 

1. Differentiate between trade creation and trade diversion.

 

 

PART- B                                            (4 X 10 = 40 marks)

 

 

 Answer any FOUR questions in 300 words each. Each question carries TEN marks.

 

 

1. With reference to the table below and assuming that the wage rate per man-hour

is $6 in the US and £1 in the UK

 

Commodity	U.S.	U.K.
Wheat (bushels/man-hour)	4	1
Cloth (yards/man-hour)	3	2

 

1. express P_w and P_c in the US in terms of dollars and in the UK in terms of

pounds in the absence of trade.

1. which commodity will the US import and export if the exchange rate

between the dollar and the pound is £1 = $3 ?

1. what if £1 = $0.50 , £1 = $2,  £1 = $1 ?
2. when will trade be balanced between the US and the UK?

 

1. Explain diagrammatically the impact of the RBI’s recent intervention in the foreign exchange market to prevent the rupee from steeply depreciating against the US dollar.

 

1. Discuss the issues plaguing the WTO trade negotiations under the Doha Round.

 

1. The market rate for Indian Rupees is 3% p.a. while that for US Dollars is 8% p.a. (both with continuous compounding). A financial institution enters into a currency swap whereby it receives 4% p.a. in Rupees and pays 7% p.a. in Dollars once a year. The principals in the two currencies are Rs.1200 million and $10 million. The maturity period of the currency swap is 3 years and the current spot exchange rate is Rs.48 = $1. Determine the value of the currency swap in dollars.

 

1. Compare foreign exchange options with foreign exchange forwards and futures.

 

1. Define the concept of balance of payments. How are the following transactions entered into the US balance of payments?

1. a) The US gives $200 cash aid to the government of India.
2. b) India uses the cash aid to import $200 worth of machinery from the US.
3. c) If the above two transactions occur during the same year, how will they be

reflected in the US balance of payments?

 

1. Differentiate between Currency Board Arrangements and Dollarisation. Illustrate your answer with suitable examples.

 

PART- C                                             (2 X 20 = 40 marks)

 

 

Answer any TWO questions in 1200 words each. Each question carries TWENTY

marks.

 

 

1. Explain the Stolper-Samuelson theorem and show how the Metzler paradox is an exception to this theorem.

 

1. Describe the salient features of the European Union as a good example of economic integration.

 

1. Discuss the Heckscher-Ohlin model of international trade. What did Leontief discover by testing this model empirically?

 

1. With the help of a diagram explain the IS-LM-BP model with flexible exchange rates and perfect capital mobility.

 

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