ECO 336 Exam 1 2025

Which of the following kinds of agreements between two or more countries would be an example of a deep integration measure? - -An agreement to use the same environmental standards in production The International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT) were formed - -after World War II. Question content area top Part 1 An example of a foreign direct investment (FDI) would include - -a U.S. couple buying land for their dream retirement home in Costa Rica. T/F: Domestic agricultural subsidies intended to support thenation’s farmers would not be considered a trade barrier so would not be disputed internationally. - -False T/F: More than 80% of the goods and services we buy are produced in domestic markets. - -True One of the distinguishing characteristics of capital flow today is that - -there are far more kinds of financial instruments than there were 100 years ago. Since the end of World War II, - -world trade has grown more rapidly than world output. A major impact of the transatlantic cable was - -a reduction in the time required to complete a financial transaction between New York and London. One important difference between the international economy of today and the economy of 100 years ago is - -the presence of international bodies such as the IMF and World Bank. Elimination of barriers to trade (tariffs and quotas) are referred to as _____ integration. Negotiation over domestic policies that impact international trade are referred to as _____ integration. - -Shallow, deep An important factor that increased international capital flows in the second half of the nineteenth century was - -technological innovations. Free trade in goods is predicted to - -provide consumers with lower prices. increase competition for workers and firms. Provide consumers with greater variety. An example of foreign direct investment is - -building a Starbucks shop in Canada. ECO 336 ECO 336 When world capital is allowed to flow freely between countries, it is expected that capital will flow from - -countries with abundant savings and capital to countries with low savings and capital. Your text mentions several ways that international trade flows are qualitatively different than they were a century ago. Which of the following is NOT one of those ways? - International trade in raw commodities and agricultural products is more important than it was in the past. the trade−to−GDP ratio is calculated by - -exports plus imports divided by GDP. When comparing current international capital flows with capital flows of the past, - -the number of financial instruments has increased over time. Transactions costs appear to have fallen. the level of financial flows compared to GDP has not changed significantly. A key institution that did NOT directly arise from post-WWII negotiations was the - WTO. Countries that have high rates of saving also tend to have - -high rates of investment. Financial capital flows could include - -currency market transactions. T/F: Open economies grow more slowly than closed economies. - -False T/F: Capital and labor only very recently have been free to move across international borders. - -False International economics is most often - -a specialty within the field of general economics. Economists - -describe reducing tariffs and quotas as shallow integration. Statistical empirical evidence consistently shows that countries that are more open - tend to grow faster than countries that are closed. Which of these statements about international economics is FALSE? - -International economics requires mostly soft skills and has almost no analytical component. A relative measure of the importance of trade is - -trade as a percentage of GDP. Countries such as the United States that have large populations tend to have - -lower trade−to−GDP ratios. Labor mobility was - -greater in 1900 than in 2010. ECO 336 ECO 336 Suppose Turkey has exports of 2 billion Turkish Lira, while its imports are 2 billion Turkish Lira. Calculate Turkey's "Index of Openness" (Trade-to-GDP ratio) assuming Turkey has 10 billion Turkish Lira of output, or GDP. - -Turkey's Trade-to-GDP ration = 0.4 One of the reasons we know that international labor mobility has been higher at other times is because - -the percent of our population that was foreign born was higher. T/F: While the world was fairly integrated at the turn of the last century, most trade was in agricultural and raw materials, whereas today manufactured consumer and producer goods play a much greater role in determining exports and imports. - -True The elimination or reduction of trade barriers caused by non-trade-related domestic policies is referred to as - -deep integration. All of the following are differences in capital flows today from the past, EXCEPT - -the problem of volatility in financial capital flows. Made in the USA or Made in China has less meaning for products that - -are technological and involve assembling many different types of sometimes sophisticated components. T/F: Capital flows between countries are smaller than in past decades in absolute terms. - -False The trade−to−GDP ratio for a nation that had $600 million in exports, $400 million in imports, and GDP of $2,000 million would be - -0.5 T/F: Most economists support open trade because it increase our choices as consumers, lowers costs for producers, increases competition and innovation, and leads to greater diffusion of technological change. - -True Deep integration - -requires cooperation with other national governments or international bodies. Which of the following kinds of agreements between two or more countries would be an example of a shallow integration measure? - -An agreement to unify customs forms in order to speed up cross−border traffic When comparing current international capital flows with capital flows of the past, - -All the above. Free trade in goods is predicted to - -All the above. ECO 336 ECO 336 The elimination or reduction of trade barriers caused by non-trade-related domestic policies is referred to as - -Deep Integration Suppose Turkey has exports of 2 billion Turkish Lira, while its imports are 2 billion Turkish Lira. CalculateTurkey’s "Index of Openness" (Trade-to-GDP ratio) assuming Turkey has 10 billion Turkish Lira of output, or GDP. - -0.4 When world capital is allowed to flow freely betweencountries, it is expected that capital will flow from - -countries with abundant savings and capital to countries with low savings and capital. The International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT) were formed - -after World War II. Statistical empirical evidence consistently shows that countries that are more open - tend to grow faster than countries that are closed. Elimination of barriers to trade (tariffs and quotas) a