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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