International Trade and Trade Policy Examination, January 2011 - EC33120, Exams of Business Management and Analysis

Download International Trade and Trade Policy Examination, January 2011 - EC33120 and more Exams Business Management and Analysis in PDF only on Docsity! ARHOLIADAU EXAMINATIONS Ionawr 2011 January 2011 EC33120 INTERNATIONAL TRADE AND TRADE POLICY Time Allowed: TWO hours Answer: TWO questions 1. Outline the principal reasons for the globalisation of the world economy over the past fifty years. Explain why Rugman suggests that the world economy is more regional in nature rather than global. In what ways has globalisation led to an improvement in world welfare? 2. Explain the term foreign direct investment. What factors lead companies to become multinationals? What impact can multinationals have on their on their home and host countries? 3. Why do some countries attempt to form economic blocs? What form can these blocs take? Under what circumstances do they maximise economic welfare? 4. Why do some economist advocate free trade policies? Why do some countries fall short of adopting free trade policies? What impact does the imposition of protectionist measures have on domestic prices and output? 5. Trade patterns between nations are said to be based on their respective comparative advantages. Explain what is meant by the term comparative advantage. What do trade theories and empirical evidence suggest determines a nation’s comparative advantage? 6. What is meant by the term intra-industry trade? Why is this phenomenon regarded as important to international trade economists? Why does intra-industry trade take place in both homogeneous and differentiated goods? END OF PAPER