International Economic Relations checklist

Please write neatly and legibly!
We wish you success!

Examination on the subject "International Economic Relations"

Question 1. Suppose that the demand function for wheat in country X has the form: D = 100 - 20P, and the supply function S = 20 + 20P.
1. Determine the type of import demand function in country X, draw the import demand curve. What will be the price of wheat in the absence of foreign trade?
Let us now consider country Y, where the demand function for wheat has the form: D '= 80 - 20Р, and the supply function S' = 40 + 20Р.
2. Determine the type of export supply function in country Y and draw the export supply curve. What will be the price of wheat in country Y in the absence of foreign trade?
3. Suppose now that countries X and Y trade with each other, with the cost of transportation being zero. At what level will the world wheat price be set? What will be the trading volumes?

Question 2. South Korea exports mainly manufactured products and imports oil and raw materials for the food industry. Analyze the impact of the following events on South Korea's terms of trade:
1. The Gulf War leads to a reduction in the supply of oil on the world market;
2. Japan expands export of passenger cars to Canada and the USA;
3. in the countries of the former USSR, there is a poor harvest of grain crops;
4. The South Korean government lowers customs duties on imports of beef and citrus fruits.

Question 3. Suppose that countries A and B have two factors of production - capital and labor, using which they produce two goods - X and Y, and both countries use the same technology. In the production of goods X capital is used intensively, and in country A capital is a relatively redundant factor of production. Analyze the impact on the terms of trade and income distribution in both countries of the following economic changes:
1. increasing the capital stock in country A;
2. increasing the supply of labor in country A;
3. increasing the capital stock in country B;
4.increasing the supply of labor in the country B.
Question 4. How does GNP differ from GDP, the balance of official calculations from the balance of capital flows, net foreign assets from official foreign exchange reserves.

Question 5. If the country's net exports are growing, how does this affect the following parameters:
1. capital outflow from the country;
2. exchange rate;
3. the country's external debt;
4. foreign exchange reserves.




Question 6. If the Central Bank increases its foreign exchange reserves, how will this affect the state of the following macroeconomic variables:
1. monetary base;
2. the balance of official payments;
3. the rate of the national currency;
4. internal credit;

Question 7. Suppose a country has an annual balance of payments deficit of $ 200 billion. The Central Bank wants to sterilize the balance of payments deficit. What should he do in this case? Should he carry out foreign exchange interventions?

Question 8. As evidenced by the steep slope of the internal equilibrium function compared to the external equilibrium function in the T. Swan diagram.

Question 9. In the ISLM model, if the investment becomes very sensitive to the interest rate, what should happen to the IS and LM functions.

Question 10. To what type of integration associations would you classify the following international associations:
1.the agreement between Russia and Belarus on an economic union;
2. Agreement between Russia and Ukraine on the abolition of transit customs duties;
3. Baltic Free Trade Area, 1993 (Estonia, Latvia, Lithuania);
4. European Free Trade Association, 1960 (Western European countries).