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international economics theory

Questions and Answers of International Economics Theory

17.9 China and India’s rapid growth has also increased the intensity of environmental problems faced by both countries, especially in terms of pollution.How are the two countries tackling the
17.8 A closer examination of the trends in Chinese and Indian service exports highlights an important difference between the two countries. Explain what this difference is in terms of trade.
17.7 What are the factors that make India competitive in business services and computer and information services? Do these factors give it a comparative advantage or do they reflect some other source
17.6 What are the sources of China’s comparative advantage and how does that show up in the goods it trades?
17.5 China is engaged in extensive industrial upgrading. What comparative advantage does this create for China in producing high value-added goods or technology-intensive goods?
17.3 What were the factors that led to economic reform in India, and what were the main elements of the reforms?
17.2 Describe the process of Chinese reforms from their beginning in 1978 up until China’s accession to the WTO.
17.1 Compare the role of agriculture in China and India.
17.7 Discuss the impact of Chinese manufacturing on industrial economies such as the United States.
17.6 Use a gravity model to explain Chinese and Indian trade patterns.
17.5 Compare and contrast Indian and Chinese economic growth.
17.4 Compare and contrast the transition from socialism to capitalism in China and Russia.
17.3 Relate the economic reforms that occurred in China and India.
17.2 Describe the demographic trends in China and India.
17.1 State why China and India are considered disruptive to the world’s economic status quo.
16.6 Is there a uniquely Asian model of economic growth? What are the issues, and how might we go about answering that question?
16.5 How might the accumulation of physical and human capital contribute to economic growth?
16.4 Economists are divided over the effectiveness of East Asian industrial policies.Provide a balanced assessment of the issues relevant to understanding the role of industrial policies in fostering
16.3 What are the characteristics of East Asian institutional environments that contributed to rapid economic growth?
16.2 How can passage through a demographic transition lead to high savings and investment rates?
16.6 Define total factor productivity and explain why economists use it to understand whether growth in East Asia is similar to growth elsewhere.
16.5 Evaluate the impact of export promotion policies and the debate over their applicability to other world regions.
16.4 Explain the pros and cons of the idea that industrial policies mattered to East Asian success.
16.3 Analyze the degree of openness in the export-oriented East Asian economies.
16.2 Describe how the institutional environment supported economic growth.
16.1 List four general characteristics of success in the export-oriented East Asian economies.
15.10 What was the content of Latin American trade reforms of the late 1980s and 1990s? How do the actions taken relate to the desired goals?
15.9 What are the differences between the orthodox and the heterodox models in terms of the approach to control inflation?
15.8 What is the difference between stabilization policies and structural adjustment policies? Give examples of each.
15.5 Explain how economic populist policies usually lead to overvalued exchange rates and large trade deficits.
15.3 Why it is said that ISI overestimates the technical ability of a government to identify market failures and their solutions?
15.1 What were the main characteristics of economic growth in Latin America from the end of World War II until the debt crisis of the 1980s?
15.5 Explain why some Latin American leaders have become impatient with economic policy reforms.
15.4 Discuss the goals of economic policy reforms that began in the later 1980s.
15.2 Explain the strategy and performance of economic populism.
15.1 Describe the strengths, weaknesses, and reasons for import substitution industrialization.
14.8 What are some of the challenges faced by a European country to become a member of the European Union? What are the challenges for the European Union to adopt new members?
14.7 What problems arose from the admission of twelve new members between 2004 and 2007?
14.6 Discuss the pros and cons of the single currency.
14.5 A sudden sharp increase in the demand for the German mark almost destroyed the Exchange Rate Mechanism in 1992. Explain how a rise in the demand for a currency can jeopardize a target zone or
14.4 What is the Schengen Agreement and why is it advantageous for a European country to join it?
14.3 The SEA is a case in which it was difficult to create an agreement, despite the fact that there was near unanimity in support of an agreement. If everyone wanted the agreement, why was it hard
14.2 What are the three main institutions of the EU, and what are their responsibilities?
14.1 What were the three main stages of deepening that occurred in the European Community after the Treaty of Rome was passed?
14.6 Analyze the EU’s single currency program within the theoretical framework of an optimal currency area.
14.5 State two theories as to why the single currency moved forward so quickly.
14.4 Give the economic rationale for each of the three waves of deepening of the EU.
14.3 Explain the obstacles to regional integration agreements.
14.2 Distinguish EU widening from EU deepening.
14.1 Describe the major institutions and treaty agreements of the EU.
13.12 Explain how NAFTA served as a model for subsequent trade agreements.
13.11 Explain how the Generalized System of Preferences (GSP) had advantages for developing countries.
13.10 What are the differences between free trade agreements and preferential agreements?
13.9 Why is immigration policy a sensitive subject in the context of U.S.–Mexico relations?
13.8 In what areas are there NAFTA side agreements? Discuss the pros and cons of these agreements.
13.7 What were Mexico’s motives for proposing and signing the NAFTA?
13.6 What were the forces at work in the Mexican economy that led to the market reforms and market opening of the mid-1980s?
13.5 What were Canada’s motives for proposing and signing the Canadian–U.S.Free Trade Agreement?
13.4 Explain how an increase in U.S. and Canadian intraindustry trade altered the level of productivity in the affected Canadian sector.
13.3 Why is the United States considered to not have any real value added in its manufacturing sector?
13.2 How has the trade-to-GDP ratio changed for the United States over the last several decades?
13.1 What factors caused the United States to shift its focus from a more multilateral approach to a more bilateral and plurilateral one?
13.6 State why it is difficult to have precise estimates of job gains and losses due to trade, and give specific examples of how imports may create jobs and exports may occur after a loss of jobs.
13.5 Differentiate free trade agreements from preferential trade agreements and give examples of each.
13.4 State the reasons why Mexico and Canada sought free trade with the United States.
13.3 Explain when purchasing power parity estimates of income per person are superior to the alternatives, and when they are inferior.
13.2 Evaluate the relative importance of the North American Free Trade Agreement, both for what it accomplished and as a model for subsequent agreements.
13.1 Identify major changes in U.S. economic relations that have led to bilateral and plurilateral agreements.
12.10 How has the role of the IMF come under scrutiny in the recent discussion of reforms in the international financial architecture?
12.9 What were the main factors leading to the Asian crisis of 1997?
12.8 Some people argue that U.S. loans to Mexico in 1995 led to the Asian crisis.Explain the logic of this argument.
12.7 Explain the moral hazard problems inherent in responding to a crisis.
12.6 In a crisis not caused by macroeconomic imbalances, economists are uncertain whether a country should try to guard against recession or try to defend its currency. Why are these mutually
12.5 Does the adoption of a crawling peg exchange rate system increase a country’s vulnerability to financial crisis? Explain your answer.
12.4 Why are crises associated with severe recessions? Specifically, what happens during an international financial crisis to create a recession in the affected country or countries?
12.3 How do the Basel Accords, the international agreements regulating bank capital levels, help in preventing the problem of moral hazard?
12.2 In the text, the point is made that the expectation of a crisis from volatile capital flows is sometimes a self-fulfilling crisis. How can a crisis develop as the self-fulfillment of the
12.1 What is an international financial crisis, and what are the two main causes?
12.5 Describe the main forces behind the global financial crisis that began in 2007.
12.4 Explain the need for reforms in the architecture of international finance and international financial institutions.
12.3 List and explain three measures countries can take to reduce their exposure to financial crises.
12.2 Distinguish a crisis caused by economic imbalances from one caused by volatile capital flows.
12.1 Define three types of crises.
11.9 Suppose the United States, Japan, and many other places around the world go into recession, but growth remains strong in Europe. Why would macroeconomic policy coordination help, who should
11.8 The debt crisis of the 1980s severely hit Argentina, significantly reducing its GDP while sharply increasing inflation. Politicians experimented with various policies to combat the recession and
11.7 Describe the larger economic effects of the policies in the previous question.That is, what would be the effects on income, consumption, employment, interest rates, and real exchange rates of
11.6 The United States budget deficit has widened since 2009, marking a turning point in the economy’s fiscal outlook as an ageing population has increased government spending and debt. Under these
11.5 Some countries have fixed exchange rate systems instead of flexible systems.How does the exchange rate system limit their ability to use monetary policy?
11.4 Describe the mechanism that leads from a change in fiscal policy to changes in interest rates, the exchange rate, and the current account balance.Do the same for monetary policy.
11.3 What are some of the problems in trying to use fiscal and monetary policies?Why can’t economists and politicians make precise predictions about the effects of a policy change on income and
11.2 Explain the concepts of fiscal and monetary policy. Who conducts them and how do they work their way through the economy?
11.1 Using aggregate demand and aggregate supply, graph the effects on the price level and GDP of each of the following:a. An increase in income taxesb. A decrease in government spendingc. A rise in
11.5 Draw a J-curve and use it to show how exchange rate depreciation does not lead to an immediate reduction in the current account deficit.
11.4 Explain how expenditure switching and expenditure reducing policies can be used to reduce a current account deficit.
11.3 Analyze the effects of fiscal and monetary policies on the current account and the exchange rate.
11.2 Diagram the effects on GDP and the price level of expansionary and contractionary fiscal and monetary policies.
11.1 Diagram a shift in aggregate demand or supply and explain the impact on the price level and GDP.
10.10 Why do some economists claim that the most important feature of any exchange rate system is its credibility?
10.9 Suppose that U.S. interest rates are 4 percent more than rates in the EU.a. Would you expect the dollar to appreciate or depreciate against the euro, and by how much?b. If, contrary to your
10.8 Brazil, Argentina, Paraguay, Uruguay, Venezuela, and Bolivia are members of the Common Market of the South (Mercado Común del Sur, or MERCOSUR), a regional trade area that is trying to become a

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