Questions and Answers of International Trade

2. Figure 3-7 presents wages in the manufacturing and services sectors for the period 1973 to 2012. Is the difference in wages across sectors consistent with either the Ricardian model studied in
1. Why is the specific-factors model referred to as a short-run model?
12. Using the results from Problem 11, explain why the Ricardian model predicts that Mexico would gain more than the United States when the two countries signed the North American Free Trade
11. (This is a harder question.) Suppose that the Home country is much larger than the Foreign country. For example, suppose we double the number of workers at Home from 25 to 50.Then Home is willing
10.a. Using Figure 2-5, show that an increase in the relative price of wheat from its world relative price of 23 will raise Home’s utility.b. Using Figure 2-6, show that an increase in the relative
9.a. Suppose that the number of workers doubles in Home. What happens to the Home PPF and what happens to the no-trade relative price of wheat?b. Suppose that there is technological progress in the
7. Assume that Home and Foreign produce two goods, TVs and cars, and use the information below to answer the following questions:a. What is the marginal product of labor for TVs and cars in the Home
6. Answer the following questions using the information given by the accompanying table:a. Complete the table for this problem in the same manner as Table 2-2.b. Which country has an absolute
5. Now suppose the world relative price of cars is PC /PTV = 1.a. In what good will each country specialize?Briefly explain why.b. Graph the new world price line for each country in the figures in
4. Suppose that in the absence of trade, Home consumes nine cars and two TVs, while Foreign consumes two cars and nine TVs. Add the indifference curve for each country to the figures in Problems 2
3. Suppose that each worker in the Foreign country can produce two cars or three TVs. Assume that Foreign also has four workers.a. Graph the production possibilities frontier for the Foreign
2. Suppose that each worker in the Home country can produce three cars or two TVs. Assume that Home has four workers.a. Graph the production possibilities frontier for the Home country.b. What is the
1. At the beginning of the chapter, there is a brief quotation from David Ricardo; here is a longer version of what Ricardo wrote:England may be so circumstanced, that to produce the cloth may
2. The quotation from Federal Reserve Chairman Ben Bernanke at the beginning of the chapter is from a speech that he delivered in JacksonHole, Wyoming, on August 25, 2006, titled “Global Economic
1. Figures 1-2 and 1-6 rely on data from 2010, and Figure 1-5 relies on data from 2005, to map worldwide trade, migration, and FDI.Updated data for migration and FDI were not available at the time
16 Do the bills of lading show a ‘notify’ party?
15 Are the bills of lading stamped ‘freight paid’ or ‘freight payable at destination’ as stipulated in the credit? Are they properly issued and endorsed?
14 Is a full set of bills of lading being presented? If not, does the credit allow an original to go direct to consignee?
13 Does it show the name of the agent responsible for handling claims and is it properly endorsed?
12 Is the insurance document dated no later than the transport document?
11 Is the insurance document issued for the correct percentage of cover, usually 10% above CIF value and is it in the same currency as the credit?
10 Are all documents issued by the parties stipulated in the credit?
9 Are miscellaneous documents, such as packing list, inspection certificate, weight note, etc., issued separately and not combined with other documents?
8 Has the invoice or certificate of origin been certified and/or legalized if required under the credit terms?
7 Where documents include shipping marks, are they exactly as shown on the document of despatch?
6 Does the invoice agree with supporting documents as regards unit price, description of goods, weight and term of shipment?
5 Is the invoice issued by you and is your name shown exactly as stated in the credit?
4 Is the draft drawn correctly and for the tenor stipulated in the credit?
3 Is the draft to be drawn on issuing or confirming bank?
2 Is the available balance sufficient to cover presentation?
1 Is credit still valid?
7 Remember, if you are importing goods under an irrevocable credit and intend selling those goods on to a final buyer, the issuing bank will either want you to pay immediately you take up the
6 If your supplier asks for a confirmed irrevocable credit make sure that your issuing bank stipulates that confirmation charges are for account of the beneficiary (your supplier) – they can be
5 It can be made available to a supplier anywhere in the world, in any currency.
4 You are strongly advised not to include contract details in your documentary credit applications. The reason is obvious: if you amend the terms of your contract with the exporter, the credit will
3 Where the contract does not specify the terms of the credit, any subsequent agreement between the two parties as to its terms following issue by the applicant’s bank may be said to supplement the
2 You may send a pre-advice of the credit, but if you do so through your bank make sure that it is sent ‘without engagement’ otherwise the bank will be obliged to issue the full credit
1 If your contract does not state specifically the terms of the credit, you should have it opened as you think appropriate and leave your supplier to accept or reject it.
Can be payable at a future determinable date, thus allowing you to obtain credit from your supplier, i.e. it can be payable 30/60/90/180 days from presentation of documents and is known as a usance
Can be payable as to, say, 85% against shipping documents with a balance of 15% payable after independent inspection at port of destination.If your supplier is not prepared to wait for payment of the
Can permit advance payment(s) against suitable security, e.g. bankers advance payment bond, warehouse warrant (approved warehouse).
Can be payable against documents which include a performance bond issued by a bank acceptable to the issuing bank.
Can include documents which will evidence that the goods are as described in the buyer/seller contract, e.g. independent inspection report.
Will ensure that your supplier cannot be paid if those documents are out of order.
Will ensure that your supplier cannot be paid until he produces and presents the documents stipulated in the credit.
they will not request advance payments without offering acceptable security?
they will deliver goods of perfect quality?
they will complete delivery of the required goods within the prescribed time allowed?
they will fully comply with the terms of your contract with them?
7 If the negotiating bank refuses your documents due to a discrepancy(ies):ask for them back and correct the discrepancy(ies), or request the negotiating bank to telex the issuing bank for authority
6 Make certain that you present all the required documents when requesting negotiation under the credit and ensure that they are in full compliance with the terms.
5 Diarize the latest shipment and expiry dates, especially if you are producing or manufacturing goods. If you miss the latest shipment date you are entirely at the mercy of the applicant who may
4 If their standing does not satisfy you, ask the advising bank to add their confirmation to the letter of credit. (Remember, you may have to pay the charges!)
3 If the issuing bank is unknown to you, ask the advising bank to provide details of their standing.
2 Check required documentation and request amendment from the applicant if you cannot comply. For example, legalization of invoices or certificate of origin may be impossible in your town/city of
1 Check that validity and latest shipment dates can be met.
2 Once issued, the credit is available until expiry; cancellation can only be made with the agreement of all parties.
1 The credit contains an undertaking by the issuing bank that, provided the beneficiary (exporter) complies with all its terms and presents documents in order within the validity date, he will be
documentation required; this is particularly important where the applicant is not the actual importer, but simply a merchant selling the goods on to an importer possibly in another country
exact type required, e.g. straight, negotiation, revolving, red clause, etc.
whether documentary credits should be confirmed or unconfirmed, sight or usance
what is to happen to the bill of exchange after it has been accepted(discount, etc.)how proceeds of the collection are to be remitted back.
whether documents may be released to the buyer even if he refuses to pay the collecting bank’s charges
in the event of non-payment whether they wish the relative goods to be warehoused and insured
Q35 What do you understand by the term compensation when applied to a countertrade deal?
Q34 What is the term used to describe a deal set up solely for the exchange of goods?
Q33 Under countertrade deals what is the original supplier committed to do?
Q32 Are switch currencies convertible?
Q31 What is the difference between an offset deal and a counterpurchase deal?
Q30 Name two negotiable instruments.
Q29 You receive from the issuing bank, a red clause credit which you advise to the beneficiary. The credit allows a cash advance of 20%:(a) Are you obliged to make the advance?(b) Would it make any
Q28 Under what circumstances would a remitting bank examine documents which it was handling as a collection?
Q27 Documents are presented under a credit covering shipment of six cases of machine tools. What particular detail, which will appear on all documents, must be identical on each?
Q26 You are the issuing bank and you receive documents under one of your credits from a negotiating bank. Upon examination you discover discrepancies. Who do you contact first:(a) the applicant,
Q25 If a credit calls for a ‘shipped’ bill of lading, what would you look for to ensure that the bill of lading presented was correct?
Q24 The beneficiary of a transferable credit requests the nominated bank to transfer it. What alterations is he permitted to make under UCP500?
Q23 What must the drawee do to become liable on a bill of exchange?
Q22 (a) What is the difference between a bill of exchange drawn at 90 days fixed and one drawn at 90 days sight?(b) As a negotiating bank, which would you prefer if the drawee was in a foreign
Q21 What is the difference between a shipping company’s bill of lading and a charterparty bill of lading?
Q20 Who can sign a bill of lading?
Q19 An irrevocable credit is opened covering 6000 tons of steel; part shipments are not permitted. What is the minimum quantity the exporter may ship in accordance with UCP500?
Q18 Documents for a value of US$150 000 are presented against a CIF credit. They include an insurance certificate for £100 000. The current exchange rage is US$1.50 = £1. Is the insurance
Q17 Uniform Rules for Collection require the collecting bank to advise the remitting bank immediately upon non-payment or non-acceptance by the drawee – why?Sometimes the remitting bank asks to be
Q16 You are an exporter selling goods on a collection basis. If you sold FOB or CFR, would you be taking a greater risk than selling CIF?
Q15 Why do we call a standby credit a negative credit? How did this type of credit originate?
Q14 What is a multimodal bill of lading? If it is to be acceptable under a documentary credit, what essential feature must it have?
Q13 What does ‘pour aval’ mean when applied to a bill of exchange?
Q12 A buyer in Turkey buys three combine harvesters from an exporter in Paris on ex works terms for shipment to Izmir – list the costs to be borne by the buyer.
Q11 There are three parties appearing on the front of a bill of exchange, who are they? Could there be more than three parties to the bill? If so, how?
Q10 Does a mate’s receipt give title to the goods detailed on it?
Q9 What is the purpose of a tender bond?
Q8 As an exporter you are offered by the importer:(a) a usance credit(b) a deferred payment credit.Which would you prefer and why?
Q7 You are the advising bank for a $250 000 credit valid for 9 months.The issuing bank asks you to confirm the credit. Are you obliged to:(a) confirm it?(b) confirm it for 9 months?(c) confirm it for
Q6 Who makes the first presentation under a transferable credit?
Q5 Name three types of credits which provide pre-shipment finance.
Q4 How would you describe a clean bill of lading?
Q3 When documents are sent for collection on a D/A basis, when are they released to the importer?
Q2 What basic documents must be supplied for a CIF Shipment?
Q1 What does FOB mean?Who pays the freight?
4 Bolero electronic bills of lading will be used to replace the present paper version. Bills of lading will be registered by Bolero on a central registry which will maintain a record of who are the

Showing 100 - 200 of 589