1.Arguments about Trade
After reading this article from The Economist- answer the following questions:
a. Summarize two arguments made in the article that favor free trade, and two arguments that have been made against free trade.
b. How successfully has China been absorbed into the world market?
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2. Measuring Openness to Trade
Openness to trade is sometimes measured as the value of imports plus exports as a fraction of GDP.
a. Calculate this measure of openness for a recent year for the following countries:
USA, China, Japan, Mexico, Singapore, Ireland, Germany, India, Kenya, Mali, Australia, Brazil, and Colombia, plus two other countries of your choice.
b. Suggest some explanations for why openness varies from one country to the next.
3.Pattern of Trade
Here is some information on annual output per worker (aka labor productivity) for countries A and B.
a. Which country has an absolute advantage in producing paper? Garments?
b. Which country will have a higher standard of living?
c. Which country will export garments? Why?
d. Now labor productivity doubles in Country A. What change, if any, will this make to the direction of trade? Explain.
Suppose a country is importing soybeans, which sell on the world market for $400 per tonne, and is levying a tariff of 25%.
a. On a clear diagram, show the price paid by consumers, the quantity of imports, and government revenue from the tariff.
b. Now the government reduces the tariff to 10%. Show the effect on your diagram, and explain who loses and gains from this change. Does the tariff reduction lead to a net gain or loss to the country? Explain.
5. International Students
Increasingly, international trade involves services as well as merchandise. One important industry is higher education, where many international students come to study in the US, and many US students go abroad to study.
a. How many international students are studying in the US? What are the main countries of origin of these students? What subjects do they mainly study? And how has the volume and pattern of international students changed over the past decade? Paper (tons) Garments Country A 800 4,800 Country B 1,000 5,000 Ec 102, fall 2017, PS 9Page of Time needed to complete:
b. How many US students study abroad? Where do they mainly go to study? How have the number and destination of US students abroad changed over the past decade?
c. How much does the US earn annually from international students? [This may require a bit of searching.] How much does the Boston area earn annually from international students?
Over the past two decades, the number of international tourists has more than doubled. Write a short piece on Trends and Patterns in the Volume and Value of International Tourism.
Product code: Economics-QA26
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