国际经济学

Terms

CHAPTER 1An Introduction to International Trade

Gross national product (GNP): The value of final goods and services produced by domestic factors of production.

Gross domestic product (GDP): The value of final goods and services produced within a country.

Exports:Goods sold by economic agents located in one country to economic agents located in another.

Imports: Goods purchased by economic agents located in one country from economic agents located in another.

Index of openness:A measure of the importance of international trade to an economy, calculated as the ratio of exports over total domestic production.

Trade deficits and surpluses:A country has a trade deficit (surplus) if its imports (exports) exceed its exports (imports).

CHAPTER 2Tools of Analysis for International Trade Models

Positive analysis:Analysis that studies economic behavior without making recommendations about what is or ought to be.

Normative analysis:Economic analysis that makes value judgments regarding what is or should be.

General equilibrium:Simultaneous equilibrium in all the markets of an economy.

Money illusion: A situation where individuals make decisions based on changes in some prices without taking into account changes in others.

Relative price:A ratio of two product prices.

Nominal price: A price expressed in terms of money.

Production possibility frontier (PPF):A diagram that shows the maximum amount of one type of good that can be produced in an economy, given the production of the other. Opportunity (or social) cost: The amount of production of one type of good that must be sacrificed to produce one more unit of the other.

Indifference curve: A diagram that expresses the consumption preferences of an individual consumer.

Community indifference curve (CIC): A diagram that expresses the preferences of all the consumers of a country.

Autarky: A situation where a country does not take part in international trade.

National supply: The amount of national output of a particular good at various relative prices for that good.

National demand: The amount of national consumption of a particular good at various relative prices.

CHAPTER 3The Classical Model of International Trade

International division of labor: Specialization by nations in the production of only a few goods.

Mercantilism: A system of government policies and institutions aimed at increasing exports and decreasing imports.

Constant returns to scale: A technological relationship such that proportionate changes in inputs lead to proportionate changes in output.

Absolute advantage:The ability of a country to produce a good using fewer productive inputs than is possible anywhere else in the world.

Comparative advantage: A country has comparative advantage in a good if the product has a lower pretrade relative price than is found elsewhere in the world.

Terms of trade: The relative price at which trade occurs between countries. Consumption possibility frontier: The various bundles of goods that a country can obtain by taking advantage of international trade.

Trade triangle: A geometric device that tells us the amounts a country is willing to trade at a particular world price.

Walras Law:In a world with n markets, if n-1 are in equilibrium, so is the nth.

Reciprocal demand:The process of international interaction of demand and supply necessary to produce an equilibrium international price.

Importance of being unimportant:When small countries trade with big countries, the small are likely to enjoy most of the mutual gains from trade.

CHAPTER 4The Heckscher-Ohlin Theory

Factor endowments:The quantities of factors of production (e.g., labor and machines) possessed by a country.

Labor (capital) intensive: A good is labor (capital) intensive relative to another good if its production requires more (less) labor per machine than the other good requires in its production.

Labor (capital) abundant: A country is labor (capital) abundant relative to another country if it has more (less) workers per machine than the other country.

Incomplete specialization: A country is incompletely specialized in production if ,after trade begins, it continues to produce some of the good it imports.

Factor price equalization (FPE):Factor price equalization occurs if all individual factor price (e.g., wages, rental payments) are identical when measured in the same currency.

CHAPTER 5Tests of Trade Models-The Leontief Paradox and Its Aftermath

Input-output table:A table that details the sales of each industry to all other industries in an economy.

Leontief paradox:The finding that U.S. exports tend to come from labor-intensive industries, while U.S. imports are produced using relatively capital-intensive techniques. Product life cycle: The process by which a product is invented and then over time becomes more standardized as consumers and producers gain familiarity with its features.

Intraindustry trade: The simultaneous import and export of similar types of products by a country.

Increasing returns to scale: A technological situation in which proportionate increases in the use of productive inputs lead to greater than proportionate increases in output.

CHAPTER 6Tariffs

Commercial policy: Actions taken by a government to influence the quantity and composition of that country's international trade.

Tariff:A tax imposed by a government on either exports or imports.

Quota: A government-mandated limitation on either the quantity or value of trade in a product.

Subsidy:A government payment to an industry based upon the amount it engages in international trade.

Nontariff barriers: A wide range of government policies other than tariffs designed to affect the volume or composition of a country's international trade.

Static gains from trade:Increases in economic well-being, holding resources and technology constant, that accrue to a country engaging in international trade.

Dynamic gains from trade:Increases in economic well-being that accrue to an economy because trade expands the resources of a country or induces increases in the productivity of existing resources.

Political gains from trade:Increases in economic well-being that accrue to a country because expanded trade and economic interdependency may increase the likelihood of reduced international hostility.

Revenue effect: The amount of revenue accruing to a government from a tariff. Protective effect: The amount by which domestic producers are able to expand their output because a tariff is in place.

Most favored nation (MFN) status:A country confers MFN status upon another country by agreeing not to charge tariffs on that country's goods that are any higher than those it imposes on the goods of any other country.

Ad valorem tariff: A trade tax equal to a given percentage of selling price.

Specific tariff:A trade tax equal to a fixed amount of money per unit sold.

Compound tariff: A trade tax that has both a specific and an ad valorem component. Generalized system of preferences (GSP): A system where industrialized countries charge preferential lower tariff rates on goods from certain developing countries.

Consumer surplus: The difference between the amount consumers are willing to pay to purchase a given quantity of goods and the amount they have to pay to purchase those goods.

Producer surplus: The difference between the price paid in the market for a good and the minimum price required by an industry to produce and market that good. Deadweight cost of the tariff: Value of wasted resources devoted to expanded domestic consumption and expenditures devoted to less desired substitutes brought about by a tariff.

Optimal tariff: The size of a tariff that raises the welfare of a tariff-imposing country by the greatest amount relative to free-trade welfare levels.

Trade (or tariff) war: A general reduction in world trade brought about by increases in trade barriers throughout the world.

Average tariff:A measure of the height of a country's tariff barriers.

Effective rate of protection (ERP): The amount of protection provided to the domestic content of a product by the tariff structure of a country.

Tariff escalation: Tariff rates that rise with stages of processing.

CHAPTER 7Nontariff Barriers and Arguments for Protection

Quota:A government-mandated limitation on either the quantity or value of trade in a product.

Embargo:A complete ban on trade in a product or products.

Tariff rate quotas (TRQs):Policies that allow a certain quantity of a good into a country at low (often zero) tariff rates, but then apply higher tariffs to quantities that exceed the quota.

Quota rents:Profits that come about because a quota has artificially raised the price of imported products.

Voluntary export restraint (VER): An agreement reached between importing and exporting countries whereby the exporters agree to limit the amount they export.

Export subsidy: A payment by a government to an industry that leads to an expansion of exports by that industry.

Countervailing duty: A tariff imposed by an importing country designed to offset artificially low prices charged by exporters.

“Buy American” acts:Laws that direct purchasing agents of U.S. federal, state, and local governments to purchase American products unless comparable foreign goods are substantially cheaper.

Infant industry argument: The argument holding that new industries may need temporary protection until they have mastered the production and marketing techniques necessary to be competitive in the world market.

CHAPTER 8Commercial Policy: History and Practice

Logrolling:The trading of votes by legislators to secure approval on issues of interest (e.g., tariffs) to each one.

Unconditional most favored nation status: The principle of nondiscrimination in international trade.

Dumping:Selling a product in a foreign market at a price that is below fair market value. Predatory dumping: Dumping in order to drive foreign competitors out of their market so that the market can be monopolized.

International price discrimination: Selling a product in two different countries at two different prices.

Dumping margin:The difference between the market price of a product and its fair market value.

Injury test:An investigation to determine whether an unfair foreign trade practice has caused or threatens to cause harm to a domestic industry.

Countervailing duty:A tariff designed to raise the price of an imported product to its fair market value.

Upstream subsidy:A subsidy that lowers the cost of an input for a manufacture. Section 301:A provision in U.S. trade law that requires the U.S. government to negotiate the elimination of foreign unfair trade practices and to retaliate against offending countries if negotiations fail.

Escape clause: A measure in U.S. trade law that allows for temporary protection against fairly traded foreign imports.

Trade adjustment assistance (TAA):Payments made by the government to help factors retrain or retool after they have been displaced by foreign competition.

Safeguards protection: A general name for measures such as the escape clause.

CHAPTER 9Preferential Trade Arrangements

Free-trade area (FTA): An agreement among several countries to eliminate internal barriers to trade but to maintain existing barriers against nonmember countries.

Customs unions (CU): An agreement among several countries to eliminate internal barriers to trade and to erect common barriers against nonmember countries.

European Union (EU): A CU among most of the nations of Western Europe .

North American Free Trade Agreement (NAFTA): An FTA among Canada , Mexico , and the United States .

Trade diversion:A shift in the pattern of trade from low-cost world producers to

higher-cost CU or FTA members.

Trade creation: An expansion in world trade that results from the formation of a preferential trade arrangement.

Single European Act:An act passed by the EU to remove various NTBs between the member countries.

European Commission:One of two executive offices of the EU government; its chief responsibility is to draft and enforce EU laws.

Council of the EU:One of two executive offices of the EU government; it has the power to make decisions about European Commission proposals and to issue directives and regulations to the member states.

European Court of Justice:Chief judiciary body of the EU that decides on the legality of council or commission actions.

European Parliament:Legislative branch of the EU government and the chief representative of the populace in the process of setting EU policy.

CHAPTER 10International Trade and Economic Growth

Economic development: The achievement of a quality of life for the average citizen of a country that is comparable to that enjoyed by the average citizen of a country with a modern economy.

Primary-export-led development strategies: Government programs designed to exploit natural comparative advantage by increasing production of a few export goods most closely related to a country's resource base.

Linkage effects:Benefits to other industries or sectors of an economy that occur as one industry expands.

Import-substitution development strategies:Policies that seek to promote rapid industrialization by erecting high barriers to foreign goods to encourage local production. Outward-looking development strategies:Government support for manufacturing sectors in which a country has potential comparative advantage.

Neutral economic growth:A proportionate increase in all factors and consumption so that trade expands proportionately to the growth of the economy.

Protrade biased growth: Growth that results in an expansion of trade that exceeds the rate of growth of GDP.

Antitrade biased growth:Growth that results in a reduction of trade relative to the size of the economy.

Neutral technical change:An innovation that results in an equiproportionate reduction in the use of all factors in the production of one unit of output.

Labor-saving (capital-saving) technical change: An innovation that results in a more than proportionate reduction in the use of labor (capital) relative to other factors in the production of one unit of output.

Immizerizing growth:Economic growth that results in a reduction in national economic welfare.

Guest workers:Foreign workers who are invited to temporarily relocate in a country to work in a certain sector of an economy.

Brain drain: The permanent relocation of skilled workers from one country to another.

Multinational corporation (MNC): A corporation that operates production or marketing facilities in more than one country.

Marginal product of labor:The additional amount of output (in physical terms) that is produced because one more worker is added to the production process.

Diminishing returns to labor: The fact that as workers are added to the production process, holding all other factors fixed, the marginal product of labor declines.

Value marginal product of labor: The monetary value of the marginal product of labor.

CHAPTER 11The Balance of Payments

Trade surplus:Merchandise exports exceed imports.

Trade deficit:Merchandise imports exceed exports.

Exchange rate: The price of one money in terms of another.

Balance-of-payments deficit (surplus): Balance-of-payments debit items exceed (are less than) the credit items in value.

Balance of trade: The value of merchandise exports minus imports.

Basic balance: The current account plus long-term capital.

Liquidity balance:The basic balance plus short-term capital plus errors and omissions. Official settlements balance:The value of the change in short-term capital held by foreign monetary agencies and official reserve asset transactions.

Balance-of-payments equilibrium:Credits equal debits for a particular account. Flexible exchange rates:Free-market supply and demand determines the value of currencies.

Fixed exchange rates:Central banks peg exchange rates at desired levels.

CHAPTER 12 The Foreign-Exchange Market

Exchange rate:The price of one money in terms of another.

Spread: The difference between the buying and selling price of a currency.

Spot market:Where currencies are traded for current delivery.

Cross rate:The third exchange rate implied by any two exchange rates involving three currencies.

Depreciate:The value of one currency falls relative to another.

Appreciate: The value of one currency rises relative to another.

Forward exchange market:Where currencies may be bought and sold for delivery in a future period.

Forward premium:The forward exchange rate exceeds the spot rate.

Forward discount:The forward exchange rate is less than the spot rate.

Foreign exchange swap:An agreement to trade currencies at one date and reverse the trade at a later date.

Hedging:An activity to offset risk.

Margin:A deposit with a broker required for trading in the futures market.

Call option:An option to buy currency.

Put option:An option to sell currency.

Striking price (exercise price): The price of currency stated in an option contract.

Black market:An illegal market in foreign exchange.

Parallel market:A free market allowed to coexist with the official market.

CHAPTER 13 Prices and Exchange Rates: Purchasing Power Parity

Nominal value:A value dependent on current price levels.

Law of one price:Similar goods sell for the same price worldwide.

Relative price change:The price of one good relative to another good changes. Random: Moving in an unpredictable manner.

Endogenous variable:A variable whose value is determined by some given factors. Exogenous variable: A variable whose value is given to the economic system by an outside force, such as government or nature.

Shock:An unexpected change.

News:Unexpected information.

Spurious relationship:Not a genuine relationship.

Undervalued currency:Currency worth less than PPP value.

Overvalued currency:Currency worth more than PPP value.

CHAPTER 14 Exchange Rates, Interest Rates, and Interest Parity

Covered return: The domestic-currency value of a foreign investment when the

foreign-currency proceeds are sold in the forward market.

Interest rate parity: The forward premium or discount is equal to the interest differential.

Effective return: The foreign interest rate plus the forward premium or discount.

Uncovered interest parity: The expected change in the exchange rate is equal to the

interest differential.

Nominal interest rate: The rate actually observed in the market.

Real interest rate: The nominal interest rate minus inflation.

Fisher equation: The nominal interest rate is equal to the real interest rate plus expected

inflation.

Term structure of interest rates: The pattern of interest rates over different terms to

maturity.

INTERNATIONAL ECONOICS TEST

No.____________ Major__________________________ Name___________

Ⅰ.Multiple Choice Questions:（Choose the ONE alternative that best completes the statement or answers the

question. 1.5%×10=15%）

( )1.All the following theories argue that the source of comparative

advantage is found on the supply side EXCEPT

A) the HO theory. B) the product life cycle theory.

C) the similarity of preferences theory. D) the Ricardian theory.

( )2. Index of openness refers to

A) the ratio of exports over total domestic production.

B) the ratio of imports over total domestic production.

C) the ratio of current account over total domestic population.

D) the ratio of both exports and imports over total domestic production.

( )3. If a production possibilities frontier is bowed out (concave to the origin),

then production occurs under conditions of

A) constant opportunity costs. B) increasing opportunity costs.

C) decreasing opportunity costs. D) infinite opportunity costs.

( )4. According to Ricardo, a country will have a comparative advantage in

the product in which its

A) labor productivity is relatively low.B) labor productivity is relatively high.

C) labor mobility is relatively low. D) labor mobility is relatively high.

( )5. In the 2-factor, 2-good Heckscher-Ohlin model, the two countries have

identical

A) tastes.

B) size.

C) relative availabilities of factors of production. D) labor productivities.

( )6. The Leontieff paradox

A) supported the validity of the Ricardian theory of comparative

advantage.

B) supported the validity of the Heckscher-Ohlin model.

C) failed to support the validity of the Ricardian theory.

D) failed to support the validity of the Heckscher-Ohlin model.

( )7. According to the Heckscher-Ohlin (HO) model, the source of comparative advantage is a country's

A) technology. B) advertising. C) factor endowments. D) Both A and C. ( )8. A trade tax equal to a given percentage of selling price is called

A) specific tariff. B) ad valorem tariff.

C) compound tariff. D) none of above.

( )9. Outward-Looking Development Strategies refer to

A) government support for manufacturing sectors in which a country has

potential comparative advantage.

B) government programs designed to exploit natural comparative

advantage by increasing production of a few export goods most closely relative to a coun try’s resource base.

C) policies that seek to promote rapid industrialization by erecting high

barriers to foreign goods to encourage local production.

D) none of above.

( )10. Trade surplus means

A) merchandise imports exceed exports.

B) merchandise exports exceed imports.

C) balance-of-payments debit items exceed the credit items.

D) balance-of-payments debit items are less than the credit items.

true and `F` if the statement is false. 1.5%×10=15%)

( )1.Trade deficits are not necessarily bad, but trade surpluses are good. ( )2.If the exchange rate is equal to the ratio of the price indexes, relative PPP holds.

( )3.Quota protection often encourages much more graft and corruption than tariff protection.

( )4. Spread refers to the difference between the buying and selling price of a currency.

( )5.The way in which a country grows can not affect its pattern of international trade.

( )6.NAFTA is a free trade area.

( )7.Preferential trade agreements may or may not be beneficial to world welfare.

( )8.A country is labor abundant relative to another country if it has more workers than the other country.

( )9.According to empirical data, larger economies tend to be more closed. ( )10.The closer the terms of trade to one country’s pre-trade price ratio, the

less the gains for the other country.

Ⅲ.Terms:(Select five terms and give their definitions in

English. 20%)

1.Optimal Tariff:

2.The Stolper-Samuelson Theorem:

3.Quota:

4.Basic balance:

5.Free trade area:

https://www.360docs.net/doc/5811979773.html,w of one price:

Ⅳ.Quantitive Questions:( Write your answers on the

spaces. 30%.)

1. (15%) Consider the right figure. Suppose Home is a large country, and the world price of a good (P W ) under free trade is $

2.00. After a tariff of $1.50 on the good imposed by Home, Foreign’s export price (P F ) is $1.50,and Home’s market price (P H ) is $

3.00. Calculate the welfare effects of the tariff on the following.

A) Home import-competing producers;

B) Home consumers;

C) the Home government;

D) deadweight cost of the tariff;

E) net change in Home’s welfare.

2. (9%) For the right case, determine the following according to the classical model: A) The pre-trade relative prices in the two countries;

B) The direction of comparative advantage;

C) Is this an absolute advantage case or a comparative advantage case?

3. (6%) Suppose the US and UK price indexes in 2005 are 107.3% and 109.3%, respectively, based on their price levels of 2003. Given that the exchange rate in 2003 is 1.58($/￡), and if the relative PPP holds, calculate the exchange rate ($/￡) in 2006.

Score Good Country A B S T 10 4 5 5

Ⅴ.Short Answer Questions:(Write your answers on the

spaces provided. 20%)

1.Consider the right table, and answer: a)Which country is relatively capital abundant? b)Which country is relatively labor abundant?

c)Supposing that good S is capital intensive relative to good T, which country will have comparative advantage in the production of S?

2.What are differences between forward contracts and futures contracts?

3.Derive the relationship between the current account and government budget. Explain the result.

INTERNATIONAL ECONOICS TEST ANSWERS

Ⅰ. Multiple Choice Questions:(Choose the ONE alternative that best completes the statement or answers the question. 1.5%×10=15%)

1.) C

2. A)

3. B)

4.B)

5.A)

6.D)

7. C)

8.B)

9.A) 10.B)

Ⅱ. True/False Questions: (Write `T` if the statement is true and `F` if the statement is false.1.5%×10=15%)

1.F

2.F

3.T

4.T

5.F

6.T

7.T

8.F

9.T 10.F

Ⅲ.Terms:(Select five terms and give the definition of each you select. 20%)

1.Optimal Tariff: the size of a tariff that raises the welfare of a tariff-imposing country by the greatest amount relative to free-trade welfare levels.

2.The Stolper-Samuelson:Theorem: Free international trade benefits the abundant factor and harms the scarce factor.

3.Quota: A government mandated limitation on either the quantity or the value of trade in

a product.

4.Basic Balace: The current account plus long-term capital.

5.Free trade area:An agreement among several countries to eliminate internal barriers to trade but to maintain existing barriers against nonmember countries.

https://www.360docs.net/doc/5811979773.html,w of one price: similar goods sell for the same price worldwide.

Ⅳ.Quantitive Questions:(Write your answers on the spaces provided. 30%)

1.a=55; b+d=7.5; c=10; e=5

A)Home import-competing producers=a=$55; B)Home consumers=-a-b-c-d=-55-10-7.5= -$72.5;

C)Home government=c+e=$15; D)deadweight cost of the tariff=b+d=$7.5;

F) net change in Home’s welfare=e-(b+d)= -$2.5.

2.A) (P S/P T)A=2/5; (P S/P T)B=1; B) country A in T, country B in S. C) absolute advantage case.

3. 7.3%-9.3%=2%; 1.58×(1-2%)=1.5484

Ⅴ.Short Answer Questions:(Write your answers on the spaces provided. 20%)

1. a) country B. b) country A.

c) country B. A country will have comparative advantage in that good whose production

is relatively intensive in the factor with which that country is relatively well endowed.

S=Y-C-G=(Y-T-C)+(T+G)=S p+S g

X=(S p+S g)-I

So, holding S p and I constant, when S g increases, X increase; when S g decreases, X decreases. In other words, reducing the government budget deficits could reduce the current account deficits.