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Unit 1 exercise

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Multiple-choice questions:

1. In 2008, the share of international visible trade is around _______ of the total value of international trade.

A.80% B. 60% C. 40% D. 20%

A. Which of the following statements about SITC is NOT correct?

A. SITC is drafted for the purpose of collecting statistics of the many varieties of goods in international trade.

B. SITC is a standard for classification of international trade in commodities. C. SITC is a standard for classification of international trade in services. D. SITC classifies international trade commodities into 10 sections.

3. In 2008, the share of trade in commercial services was about ____ of the total value of international trade.

A. 10% B. 20% C. 30% D. 40%

4. In 2008, ____ was the world’s largest exporter and importer of commercial services.

a. the United States b. Germany c. Japan d. France

5. The service or a professional adviser is supplied through a visit to him by his foreign client. According to the definition of trade in services in GATS, this service is____.

a. cross border supply of services. b. consumption abroad.

c. commercial presence in the consuming country. d. presence of natural persons.

6. Which of the following statements is not correct?

a. A favorable balance of trade is known as a trade surplus and consists of exporting more than is imported.

b. The balance of trade is an important part of the current account of a nation’s balance of payment.

c. Since 1994, Chian has maintained favorable trade balance for 15 years in succession.

d. Since the mid-1980s, the United States has had a growing surplus in tradeable goods, especially with Asian nations (China and Japan).

7. If a country uses general trade system in collecting statistic figures, this means ____

a. the statistical territory of the country coincides with its customs territory.

b. the inward and outward movement of goods through its bonded warehouses is not recorded in ties statistic figures.

c. the inward and outward movement of goods through free trade zones is not recorded in its statistic figures,

d. the statistical territory of the country coincides with its economic territory.

8. The total volume of international trade merchandise is ____

a. the summation of the imports or exports of all nations in the world. b. the summation of the value of imports of all nations in the world c. the summation of the value of exports of all nations in the world

d. the summation of the value of imports and exports of the major traders in the world. 9. Which of the following statements is correct?

a. The value of international trade can reflect the real development of international trade.

b. The quantum of international trade can reflect the real development of international trade.

c. There is no difference between the value of the international trade and the quantum of international trade.

d. The value of international trade in different periods is usually comparable. 10. Most international trade today is classified as trade in ____ a. services. b. mineral products. c. manufactured products. d. agricultural products. 11. In 2007, ____ dominated China’s exports.

a. machinery and transportation equipment b. toys, clothing and furniture c. steel d. food

12. In 2008, the largest world exporter of merchandises was ____. a. Germany b. China c. Japan d. the US 13. In 2008, China was among the top ____ exporters in the world. a. 3 b. 5 c. 10 d. 20

14. In 2007, the share of ____ in China’s exports was the largest one. a. North America b. Europe c. Asia d. Africa

15. Which of the statements about the degree of dependence on foreign trade is correct?

a. It is the ratio of exports of goods to GDP.

b. It is the ratio of experts and imports of goods to GDP.

c. In general, the ratio of dependence on foreign trade for China has been decreasing in recent years.

d. It is impossible that the ratio of dependence on foreign trade exceeds 100%.

2. True or false questions:

1. The total volume of international trade in merchandise is the aggregated volume of imports or exports of all nations throughout the world.

2. The world merchandise exports have on average outgrown the world production since 1970s.

3. The quantum of international trade is a less precise expression the value of international trade in that it does not reflect the real change of international trade.

4. At present, world trade tends to be concentrated among relatively few major traders.

5. The degree of dependence on foreign trade of an individual country means that its economic prosperity is dependent upon economic prosperity in the world as a whole.

Unit 2 Exercise

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1. In the Mercantilist view of international trade (in a two-country world), ____

a. both countries could gain from trade a t the same time, but the distribution of the gains depended upon the terms of trade.

b. both countries could gain from trade at the same time, and the terms of trade were of no consequence for the distribution of the gains. c. neither country could ever gain from trade.

One country’s gain from trade was associated with a loss for the other country.

2. The policy of minimum government interference in or regulation of economic activity advocate by Adam Smith and the Classical economists, was known as____ a. the law of comparative advantage. B. laissez-faire. c. the labor theory of value. D. Mercantilism. 3. In Adam Smith’s view, international trade____ a. benefited both trading countries.

b. was based on absolute cost differences.

c. reflected the resource base of the countries in question. d. all of the above.

4. Country A has 1000 units of labor. It takes 10 units of labor to develop 1 unit of software and produce 10 computers. What is the opportunity cost of a software in terms of computers?

a. 10 b. 0.1 c. 100 d. 50 5. In the Ricardo model, ____

a. there is only one factor of production.

b. international trade is a negative-sum game.

d. differences in factor endowments give rise to international trade. d. there is only one industry in each country.

6. If Country A has an absolute advantage in every good, then____ a. it should not engage in international trade.

b. it should engage in a small percentage of trade.

c. it should still export goods in which it has a comparative advantage. d. this is an impossible situation.

7. If Country A has a comparative advantage over Country B in producing textile, it means that____

a. Country A produces textile relatively less efficiently than County B does.

b. the labor productivity in textile industry in Country A is lower than in Country B. c. the relative price of textile (to another product) in Country A is lower than in Country B.

d. Country B will never produce textile if free trade is allowed. 8. The Ricardian model exhibits gains from trade____ a. for both trading countries.

b. only if countries specialize completely.

c. only for one of the trading countries.

d. only if each country has an absolute advantage in one of the industries.

9. The opportunity cost of producing watches in terms of shoes is 50 in Country A and is 10 in Country B. Based on the Ricardian model, what can we conclude about the pattern of trade?

a. Country A will export watches and import shoes.

b. We need to know what the relative price of watches in terms of shoes to answer this question.

c. Trade will not occur.

d. Country A will export shoes and import watches.

10. Which of the following is not an assumption in the Ricardian model? a. Labor productivity in each country is fixed. b. Markets are perfectly competitive.

c. Each country has only one factor of production and its amount is fixed. d. Labor can freely move across countries.

11. Given the following Classical-type table showing the number of days of labor input required to obtain one unit of output of each of the two commodities in each of the two counties:

Ship Computers United States 4 days 3 days

United Kingdom 5 days 6 days The United States has an absolute advantage in the production of ____. a. Ships (only) b. computers (only)

c. both ships and computers d. neither ships nor computers

12. Given the following Ricardo-type table showing the amount of labor input needed to produce one unit of output of the two goods in the two countries:

Ship Computers Germany 6 days 9 days

United Kingdom 4 days 8 days a. The United Kingdom has an absolute advantage in both goods and a comparative advantage in cloth.

b. The pre-trade price ratio in the United Kingdom is 1 steel : 2 cloth.

c. The United Kingdom has an absolute advantage in neither good but a comparative advantage in steel.

d. The pre-trade price ratio in Germany is 1 cloth : 1.5 steel 13. In the Classical (Ricardo) analysis, ____

a. if a country has an absolute advantage in a good, it also has a comparative advantage in the good.

b. if a country has a comparative advantage in a good, it cannot have an absolute advantage in the good.

c. a country can have a comparative advantage in a good at the same time that it has an absolute advantage in that good.

d. a country with an absolute advantage in all goods cannot gain from trade.