1) If Commonwealth Bank, an Australian Bank, borrows short-term funds from the United States Government, then from the United States point of view, this would be called:

(a) Inward Foreign Direct Investment (FDI). (b) Inward Portfolio Investment. (c) Outward Foreign Direct Investment (FDI). (d) Outward Portfolio Investment.

2)Consider a standard Heckscher-Ohlin model with two countries: Germany is capital-abundant; Malaysia is labour- abundant. Each country uses labour and capital to produce two goods: Good 1 is labour-intensive and Good 2 is capital-intensive. Under free trade, the world relative price of Good 2 will be: (a) Lower than the relative price of Good 2 under autarky in Malaysia. (b) Lower than the relative price of Good 2 under autarky in Germany. (c) Lower than the autarky relative price of Good 2 in both countries. (d) Higher than the autarky relative price of Good 2 in both countries.

3)If Indonesia (which is a small country) imposes an import tariff on textile imports, we can conclude that: (a) The world price of textile rises, and Indonesia imports less. (b) The world price of textile stays constant, and Indonesia imports less. (c) The world price of textile falls, and Indonesia imports less. (d) The world price of textile stays constant, and Indonesia imports the same as before.

4)Which of the following, based on their industrial policy, did not experience a significant growth rate during the 1960s, 1970s, and the 1980s? (a) Hong Kong. (b) Singapore. (c) Argentina. (d) Both Hong Kong and Singapore

4)The approach by Borjas (2003) on evaluating the effects on immigration ignores: (a) Cross-wage effects. (b) Real-wage effects. (c) Efficiency-wage effects. (d) Own-wage effects

5)The approach by Borjas (2003) on evaluating the effects on immigration ignores: (a) Cross-wage effects. (b) Real-wage effects. (c) Efficiency-wage effects. (d) Own-wage effects

6)Consider two countries: South Korea and New Zealand and two goods: Lamb and Air Pumps. South Korea imports $210 million worth of lamb from New Zealand and exports $10 million worth of lamb to New Zealand. On the other hand, New Zealand imports $60 million worth of air pumps from South Korea and exports $20 million worth of air pumps to South Korea. What is the inter-industry trade measure between these two countries? (a) 2/3. (b) 1/5. (c) 4/5. (d) 1/3.

7)Let the fixed cost for production of a good, F, be equal to $2,700; the labour requirement to produce one unit, a, be equal to 2 hours and the wage rate, w, be $25 per hour. Let Q stand for the number of units of output. The unit cost when Q = 1 is ________, and when Q = 3 is________: (a) $2,750 and $900. (b) $2,750 and $1,050. (c) $2,750 and $1400. (d) $2,750 and $950.

8)A country will choose to protect an industry to promote future comparative advantage instead of exploiting its current comparative advantage when: (a) The interest rate is high. (b) Time horizon of decision-making is long. (c) There are fixed cost in technology investments. (d) The growth rate of expertise is low.