The graph below shows the trend of the terms of trade for the U.S. and China. Which would be inferred from the graph? Figure 6.9 Evolution of the Terms of Trade for the United States and China 125 120 115 110 - China 105 100 - 95 90 - 85 - 80 United Statoo 75 70 1980 1982 1984 1986 1988 1990 1992 1994 A) China's growth may have hurt the U.S, terms of trade. 1996 1998 2000 2002 2004 2006 2008 2010 B) China's recent growth may have been export-biased. 2012 2014 OC) U.S. terms of trade have been hugely deteriorated over the past decasde. O D) U.S. exports have been competing with China's imporing sectors.

26. What are the implied relative price of wine in international trade?     a) 1/3 yard/bottle     b) 3 yards/bottle     c) 1/2 yard/bottle     d) -1/2 yard/bottle     e) 2 yards/bottle     f) 1/3 bottle/yard     g) 2 bottles/yard     h) -3 bottles/yard     i) 2/3 bottles/yard

What is the likely effect of imposing trade tariffs on imported goods on the consumer price index (CPI) in the importing country? A. The CPI will decrease because imported goods become more expensive. B. The CPI will remain unchanged because tariffs only affect the supply side. C. The CPI will increase as the cost of imported goods rises. D. The CPI will initially decrease but then increase as domestic producers adjust prices.

4.

What is the range of prices (i.e., the CPC) at which trade can occur? Also, show (a) the possible CPC for each country and (b) the possible production and consumption possibility lines for both countries after trade. Show your work!

PRICE (Dollars per unit of coffee) 70 50 45 15 с B A From the figure it is apparent that F 9 H Domestic Supply Uganda will experience a surplus of coffee if trade is not allowed. G 15 QUANTITY (Units of coffee) Domestic Demand Uganda will experience a shortage of coffee if trade is not allowed. World Price 20 foreign countries have a comparative advantage in producing coffee, relative to Uganda. Uganda has a comparative advantage in producing coffee, relative to the rest of the world.

3. Trade creation and trade diversion Suppose that with free trade, the cost to the United States of importing a calculator from Mexico is $12.00, and the cost of importing a calculator from China is $10.00. A calculator produced in the United States costs $16.00. Suppose further that before NAFTA, the United States maintained a tariff of 25% against all calculator imports. Then, under NAFTA, all tariffs between Mexico and the United States are removed, while the tariff against imports from China remains in effect. Assume that the tariff does not affect the world price of calculators. In the following table, indicate which country the United States imported calculators from before NAFTA. Then indicate which country the United States imported calculators from under NAFTA. Check all that apply. (Note: Leave the row blank if the United States doesn't import from either country.) Scenario Before NAFTA Under NAFTA Stakeholder United States Imports from... Mexico China In the following…

The US exports $10 billion worth of inorganic chemicals to Germany and imports inorganic chemicals from Germany for the same dollar amount. Japan imports $1 billion of garments from Indonesia, but does not export any to Indonesia. The measure of intra-industry trade between Germany and the US first, and between Japan and Indonesia second are respectively... a. 0.5 and 0.5 b. 1 and 0 c. -1 and 1 d. 0 and 1

Q95 The division of the gains from trade between two trading countries depends on the... a. Long-run costs. b. Quantity of resources held by each country. c. Level of unemployment in both countries. d. Size of the absolute advantages possessed by each country. e. Difference between the terms of trade and the countries' autarkic relative prices.

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