Q1

Several automobile manufacturers from State J are importing large numbers of cars to State K, taking over a large share of State K's automobile market and putting State K's own automobile manufacturers and workers out of business. State J's manufacturers are not subsidised by State J, nor are they dumping their cars at below-cost prices. Under the GATT 1994, what can State K do?

Q2

State R, a country with a centrally planned economy, uses prison labour to manufacture export goods at very low cost. When State S learns this, it imposes an import embargo on these goods. Both States are members of the WTO, and State R complains to the WTO's Dispute Settlement Body. Assuming that a Dispute Settlement Panel is appointed to resolve this matter, how will the panel rule?

Q3

The Widget Company has just imported 10,000 widgets into State A. Describe how the Customs Service of State A, a signatory of the Customs Valuation Code, will go about determining the value of these goods in the process of collecting an import tariff.

Q4

State H provides general subsidies to all of its export manufacturers by means of lowcost loans, foreign currency exchange guarantees, and discounted prices for fuel and electricity purchased from the state's energy monopoly. HowdyDoo Company, a State H manufacturer of shampoos that has taken advantage of all of these subsidies, exports its goods to State I, where its products are in direct competition with those of several local manufacturers. State I's manufacturers have complained to their government, asking the government to impose a countervailing duty on How dpo Company.

Both State H and State I are members of the WTO.

Should the countervailing duty be imposed?

Q5

State C is a major exporter of lumber products (especially plywood) to State U. State C's lumber companies are able to manufacture and sell their products in State U inexpensively because (unlike State U) State C's government charges only a nominal fee for cutting lumber in its national forest. In State U, on the other hand, the cutting fee is substantial, adding 15-20 percent to the cost of the finished lumber product. One of State U's plywood lumber companies, Multi-Ply Inc, has lost much of its market share in State U due to imports from State C. Multi-Ply Inc has complained to State U's government, arguing that State C is unfairly subsidizing its lumber companies by charging such a low forest cutting fee. Multi-Ply Inc would like State U's government to impose a countervailing duty on imports of plywood from State C. May State U do so? Note that both State C and State U are members of the WTO.

Q6

The Snicker Company, the largest manufacturer of Snickerdoodles in State F, decided about two years ago to enter the cookie market in State G. Several small companies in State G manufacture Snickerdoodles, but the market has traditionally been very small. When Snicker Company entered State G's market, Snicker Company undertook a widespread advertising campaign to promote Snickerdoodle consumption and to encourage consumers to try its product by publishing coupons in newspapers that allowed purchasers to buy Snicker's Snickerdoodles below their actual cost. As a consequence on this campaign, the sales of Snickerdoodles in State G have skyrocketed. In addition the sales of Snickerdoodles manufactured by State G firms have more than tripled. State G's Snickerdoodle manufacturers are, nonetheless, displeased because their market share has gone from 100 percent to 30 percent in two years. Concerned with this loss, State G firms have asked State G to impose anti-dumping duties on Snicker, since its Snicker doodles are being sold below cost. Both State F and State G are members of the WTO. Should State G impose anti-dumping duties on Snicker?

Lecture 2 Answer the following questions based on the components of GDP. Question 1: If businesses are accumulating more goods in inventories the effect on Investment will be: C" it will depend on the duality.F ofthe goods going into inventory. 0 decreases in investment. C" no change to investment. 0 increases to investment. Part B (10points, questions 11 to 20) Listed in the table below are National Accounts data for a small country: (billions) Consumption 400 Imports 10 Investment (gross) 40 Government purchases 100 Exports 20 Capital Consumption Allowance (CCA) 20 Statistical Discrepancy 5 Receipt of factor income from other countries 12 Payments of factor income to other countries 10 Answer the following questions (provide the correct values for each item) using data provided in the table above: 1 1. Net Exports = 12. Net Factor Income from Abroad = 13. GDP = 14. GNP = 15. NNP = 16. Consumption expenditure as a percentage of GDP = 17. Government expenditure as a percentage of GDP = Questions 18 to 20 use data in the table below: Year 1 Year 2 Price Quantity Price Quantity Oranges $5.00 100 $5.00 150 Pears $3.00 100 $4.00 75 Given the data in the table above representing the total output of a small country. Calculate Real GDP for Years 1 & 2 and the growth rate in Real GDP between the two years. Remember, use Year 2 as the base year.Question 21 [1 point) Which of the following transactions would be counted toward this year's COPY Cal General Motors purchases 10,000,000 fires from Firestone ()bl A three-hundred year-old painting is cold for $12 million 4 A street gang cars $2 millon from selling Ilegal drugs Your real culate agent earns $5,000 commission when you sell your hundred year old house for $ 100,000 Question 22 [1 point) If a used car dealer purchases a used car for $1/000, restores It and reacls E for $1 500, the doster contributes () value based equal to $500, but nothing is added to GOP value added equal to $500, and contequeraly 1500 Is added to COP nothing to production because only culling goods are involved 14 4value added equal to $1.500, but only $500 k added to COP Question 23 (1 point) When the maind propensity lo comme i 3/4. and in common cperrin will below Its full employment capacity, In the Keymedan model a $25 billion Iscreate In Tellpher is instantaneous nation 24 11 paint ali be easily divided ing that be loots 15Question 2 [1 point] Suppose Japan's economy operates according to Okun's law, with actual GDP = Y200 trillion and actual unemployment = 2 5 percent. If the natural rate of unemployment is 4%, what is potential GDP? Question 3 [6 points] You are given the following information about an economy that is experiencing an investment boom. Consumption 3000 Investment 1200 Government purchases 1500 Net exports X-M -500 Net foreign income 100 Government taxes 1000 Full employment GDP - 5000 and the natural rate of employment is 6%%. (a) Calculate GDP and the current account [I point] (b) Calculate private savings and national savings [! point ] (c) Use Okun's law to calculate the level of unemployment [1 point] (d) Suppose the boom ends and consumption falls by 300, imports fall by 500, investment falls by 250, Government spending declines by 250 and taxes decline by 100. Calculate what happens to GDP, the current account, and national savings. [2 points] (c) Explain whether a large current account deficit is good or bad for the economy in this case, and why. [1 point] Question 4 [2 points] Briefly describe the main differences between the neoclassical and Keynesian models. You should include comments on what they assume about prices and labour supply. What is the effect of positive demand shocks such as an increase in government spending on output and prices in the two models