International Economics

INTERNATOINAL ECONOMICS (PAPER - II)

M.A (FINAL) EXTERNAL ANNUAL EXAMINATION - 1997

Time: 3 Hours                                                Maximum Marks: 100

1) Attempt any five questions.

2) All questions carry equal marks.

1. What is the difference between International Trade and Inter regional trade? Explain in detail.

2. Explain with example Ricardian Theory of Comparative Advantage under the own assumption. What is the criticism on this theory?

3. Explain the factor price equalization theorem. What are the implications of possibility of the factor reversal on the validity of the Theorem?

4. Distinguish between Balance of Payments and Balance of Trade. How devaluation can correct a deficit in balance of payments of a country.

5. How exchange rate for a currency is determined? Examine the experience of floating exchange rate in Leading Economies of the world.

6. Explain the Theory of optimum tariff and demonstrate how the rate of optimum tariff can be calculated in terms of elasticities of foreign offer curve.

7. What is the nature of Loans, which are given by IMP and World Bank? Enumerate the main functions of IMF and review the performance.

8. Differentiate between Custom Union and free trade area. Briefly evaluate Mead’s contribution towards the Theory of Customs Unions.

9. Write short notes on any two of the following:

a) Special drawing rights (SDR)

b) Single and double factorial term of trade

c) J-Curve

d) Bretton Woods System.

 

1998

1. Why do nations trade? Is there a distinction to be drawn between trade within a country and trade between countries?

2. With respect to each part of the following table, indicate in which commodity Pakistan has an absolute and comparative advantage with respect to China and which commodity Pakistan should export China?

Pakistan And China labour requirement for production (Necessary labour for production).

Combination	A		B		C
Country/Production	PaK	China	Pak	China	Pak	China
Wheat	4	2	4	1	4	2
Cloth	3	2	1	1	2	1

3. Trade is more important than aid for under developed country, which is attempting to achieve steady growth? Discuss.

4. Distinguish between currency “Devaluation” and “Depreciation” and explain why a country resort to devaluation. Does devaluation of a currency always improve the Balance of Payments?

5. What is “terms of trade”? Discuss the various types of terms of trade? How do a country’s terms of trade differ from its gains from trade?

6. What do you understand by “Custom Unions”? Does an effective customs union always involve a monetary union as well? Discuss with example.

7. a) Explain how changes in the exchange rate affect net exports and aggregate demand?

b) Explain the relationship between net export and the flown of investment into and out of a country. .

8. a) Explain how exchange rates between Pakistan’s rupees and foreign currencies are established in foreign exchange market?

b) What is the “J” Curve? What explains the behavior of net export represented by the J-Curve?

9. What is GATT? Has it succeeded in achieving its goals?

 

1999

1. a) Explain the theory of “Absolute Advantage”.

b) Is there a basis for trade in the following case? Which commodity should each county export?

Country                                        Wheat

Pakistan                50 hrs./unit        30 hrs./unit

Korea                    40 hrs./unit        55 hrs./unit

2. What is meant by Economic Integration? Describe the various forms of Economic Integration.

3. Explain the Heckscher-Ohlin theory of International Trade in the context of factor reversals.

4. What is foreign exchange market? What is meant by a depreciation and appreciation of the domestic currency? How does it affect the balance of payments?

5. What does an offer curve show? How is it derived? How is the equilibrium terms of trade determined?

6. Compare the partial equilibrium effects of a tariff and quota in the small country case.

7. How can International Trade influence economic development positively over time?

8. a) What is the difference between covered interest parity and uncovered interest parity?

b) How would an investor decide whether he should invest in domestic or international money market?

9. Write short notes on any two of the following:

(i) Leontief Paradox

(ii) MTO

(iii) Balance of Payments.

 

2000

1. Explain the difference between International Trade and Inter Regional Trade.

2. Critically explain the Ricardian Theory of Comparative advantage.

3. Distinguish between Balance of Payments and Balance of Trade and explain the components of Balance of Payments.

4. How exchange rate of currency is determined? Examine the experience of floating exchange rate in developed countries.

5. Differentiate between Customs Unions and Free Trade Area. Also evaluate Mead’s contribution towards the Theory of Customs Unions.

6. Discuss the consequences of foreign aid on developing countries.

7. Explain the “Heckscher-Ohlin” theory regarding the pattern of Trade.

8. Explain the relationship between Foreign Trade and Economic Growth.

9. Write short notes on any two of the following:

a) Special Drawing Rights (SDR)

b) GATT

c) IMF

 

2001

1. Evaluate the following statements:

a) The most noticeable basis for trade stems from differences in the natural endowments such as climate, minerals and water.

b) International trade is a between people who happen to find themselves with in different national boundaries.

2. What is the difference between increasing opportunity cost and constant opportunity if trade takes place under them? Also discuss the possibility of trade under constant opportunity cost.

3. Why Leontief’s result is contradicted to Heckscher-Ohlin trade model why other Economist disagree to Leontief explanation?

4. What effects will have on factor prices if trade is introduced between the nations? What will be implication of factor prices?

5. Why does a country impose tariff and other trade restrictions? Also discuss Samuelson-Stolper Theorem.

6. What is the nature of Loans, which are given by IMF and World Bank? Discuss the role of IMF in economic development of less developed countries in the changing international situation.

7. To what extent, LDCs’^* international indebtedness presents a burden to the economies. Discuss.

8. What is exchange rate? Discuss various types o exchange rate. Also discuss its demand side and supply side and equilibrium.

9. What is the difference between Balance of Payment and Balance of Trade? If inflation increases the value of exports, would the balance of trade and exchange rate necessarily improved from inflation that is higher than other countries?

^* Less Developed Countries

 

M.A. (FINAL) EXAMINATION 2016 HELD IN 2017

ECONOMICS (PAPER II)

INTERNATIONAL ECONOMICS

Time: 3 hours                                                                                                     Max Marks: 100

Instructions

1) Attempt any FIVE questions

2) All questions carry equal marks

Q1          (a) Suppose the US requires 3 hours of labor to produce one unit of wheat and 9 hours of labor to produce one unit of clothing why UK requires 4 hours of labor to produce one unit of wheat and one unit of clothing. Which country has an absolute advantage in wheat? Including? Why?

(b) Now suppose that USA has 600 hours of labor and UK has 500 hours of labor. Prior to friend USA is using 330 of those labor hours to produce wheat and the remaining 270 labor hours to produce clothing. UK is using 300 of those labor hours to produce clothing and the remaining 200 labor hours to produce wheat. How much wheat and how much clothing will the US and UK be producing and consuming in the pre-trade situation?

(c) Now suppose that USA enters into trade with UK at a barter price of 1 clothing for 2 wheat. Suppose UK exports 40 clothing in exchange of 80 wheat, what will be the UK and US consumption of wheat and clothing in trading situation? Can you conclude that trade is a positive sum game?

Q2          What is meant by capital abundant nation and labor abundant nation? What determines the shape of the production possibility Frontier of each nation? What determines the capital labor ratio in the production of each commodity in both nations? Which of the two nations would you expect to use a higher capital labor ratio in the production of both commodities? Why?

Q3          How does the change in PPF resulting from growth in capital differ from that resulting from growth in labor? Why do they each shift the PPF outward on both axis? What is meant by production and consumption being pro-trade anti-trade and neutral after growth?

Q4          What is meant by the consumption, production, trade, revenue and redistribution effects of a tariff? What is meant by the protection cost or dead weight loss of a tariff? How is this measured?

Q5          (a) Explain the similarity between international borrowing and lending, and international trade?

(b) What is the difference between FDI and FPI?

Q6          (a) Why do developing countries object to IMF conditionalities?

(b) Make a case in favor of writing off of external debt of the developing countries

Q7          What is the difference between the financial account and the current account balance of payments? What is meant by the international investment position of a nation? What is its relationship to the nation's balance of payments?

Q8          Write short notes on any two of the following

i) Foreign trade multiplier FTM

ii) WTO

iii) Common market