Name (Print): __________________________________
INTERNATIONAL ECONOMICS
Standard Model Worksheet -- Answer on lined paper.
1.
If a country's growth is biased in favor of its import, what happens to its terms of
trade and its economic welfare? Discuss.
2.
Is it possible for economic growth in a small country to lower that country's
economic welfare? Explain.
3.
Draw a PPF-CPF diagram illustrating export-biased growth that leads to a
reduction in the exporting country’s welfare.
4.
At the conclusion of World War I, Germany, as a punishment, was obliged to
make a large transfer to France in the form of reparations. Theoretically, is it
possible that such reparations could have improved Germany's economic welfare?
Is it likely? Explain.
5.
Suppose Home, a large country, is land abundant, cloth is labor intensive and that
food is land intensive. Compare the terms of trade effect of a subsidy on Home’s
export good with the terms of trade effect of a tariff on Home’s import good.
6.
Suppose Home, a large country, is oil abundant, Consumers goods are labor
intensive and that oil is, well, oil intensive. Illustrate and discuss the terms of
trade effect of a tariff on Home’s export good.