Using your own words to answer the questions!

1. What are the three major flows/volumes that economists study?

2. In the gravity equation, what are the two most important determinants that affect (one postively and one

negatively) trade flows.

3. Why does the US trade more with Mexico than Vietnam? What does the US trade more with Germany than

Iceland?

4. What are the BIG Three international institutions? Which one is the most recently established?

5. Explain why the MFN tariff rate is usually the upper bound of the actually applied tariff schedules

6. State two main empirical facts about the world trade.

7. If you are asked to estimate the impact of the Trump tariffs on imports from China using the gravity equation.

What would be the left-hand-side variable? And what would you include on the right-hand-side

variable? Give your predictions on the sign of the coefficient for each variable included on the righthand-

side. (positive? negative? or zero?)