Name: .................................................

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INTERNATIONAL BURCH UNIVERSITY

FACULTY OF ECONOMICS

INTERNATIONAL ECONOMICS
Duration: 60 minutes

GRADE :................
MAKE-UP EXAM QUESTIONS

I Answer the following questions (each answer 5 points)

1. What causes an exchange rate crises?
It is caused by a sudden and unexpected collapse in the value of a nations currency.

2. According to the rules of WTO, what are dumping and antidumping duty?
An antidumping duty is a tariff levied on an import that is selling at a price below the products
value. Dumping occurs when an exporter sells a product at a price below what it charges in its home
market.
3. Describe the infant industry argument?
This argument is mainly associated with the tariff policies of developing nations that protect their
infant industries against the competition of more mature firms in industrial countries. Also it is used to
justify protection in some high-technology cases.

4. Which are the labor standard proposed as basic rights by the ILO?
Prohibition of forced labor
Freedom of association
The right to organize and bargain collectively
An end to the exploitation of child labor
Nondiscrimination in employment
5. Define non-transboundary environmental impact and give an example?
Non transboundary environmental impact refers to the impact that exclusively has an effect in national
borders (one countrys pollution that do not cross borders). For example, local pollution of the ground and still
waters in factory surroundings.

6. What are main responsibilities of the European Parliament?

Main responsibilities are passing laws, supervising other institutions within the European Union and
passing the final EU budget.
7. What is acquis communautaire?

EU-wide rules that include technical standards, environmental and technical inspections, banking
supervision,public accounts, statistical reporting requirements and other elements of EU law. Those
rules must be formally adopted as one of the criteria for membership.

8. What are the advantages and disadvantages for countries that adopt the same
standards?
The same standards in two or more countries lead to a larger, more unified market and creates a
greater efficiency. On the other hand it may pose the potential problem of freezing into place a set
of inferior standards, which can have a harmful effect on future developments.
9. What is moral hazard and give an example?
Moral hazard occur when there is an inventive to withhold essential information or to act in a manner that
creates personal benefits at the expense of the common goal. For example, when a seller, selling a used car,
has personal financial gain in not telling the negative information about the car.

10. List the alternatives to trade measures?

Labels for export
Requiring home country standards
Increasing international negotiations

II Choose the correct answer (each question 3 points)

11. Television programming might be targeted for protection in a country using which of
the following arguments?
a) Need for retaliation
b) Labor argument
c) Infant industry
d) National security
e) None of the above
12. The race-to-the-bottom concept described in your literature refers to
a) the situation in which human rights are not respected by trading countries.
b) adopting the standards of a few selected middle-income and high-income countries.
c) the use of low per-capita income as a means of comparing the well-being of individuals.
d) the situation in which countries with high standards are forced to lower their
standards or face the loss of jobs and industry.
e) None of the above.
13. One reason why consumers are unlikely to be too upset about tariffs is because
a) most consumers benefit from protection.
b) tariffs are an inexpensive way to create jobs.
c) consumer losses are not real losses.
d) the costs are so spread out that no one pays a big share of the total.

e) the gains of producers are larger.

14. The first and biggest problem the EU faces in its expansion to the east is
a) the lack of democracy in the countries that are most likely to become members.
b) the unwillingness of the new members to adopt EU rules.
c) the lack of market economies in the countries that are most likely to become members.
d) the unwillingness of citizens in the new member countries to migrate to higher income
countries.
e) the reform of its agricultural subsidy programs.
15. The international institution that serves as a lender of last resort is called the
a) IBRD.
b) WTO.
c) IMF.
d) World Bank.
e) GATT.
III Write an essay (min 200 words) (35 points)

Describe the connections between rising income and environmental and social indicators.
Which indicators improve and which worsen as national income rises?

The World Bank has four categories of income that it uses to classify countries: low, lowermiddle, upper-middle and high-income. Most of the world population and a majority of the
countries in the world are classified as low income or lower middle income. Large income
differences lead to very large differences in most social, economic and environmental
indicators.
Carbon dioxide is the major greenhouse gas responsible for global warming. CO2 emissions
get worse as income rises because high-income countries consume farm more energy than
other countries. Another indicator that gets worse with rise in income is the amount of solid
waste (garbage). With the rise in income the consumption habits become bigger and that
results with an increase of waste. Access to safe drinking water improves. Child mortality
and child labor both decrease as national income rises reflecting the increase in medical care
and sanitation that accompanies income growth. Other indicators are more mixed.
Deforestation occurs more in low- and upper-middle income countries, while lower-middle
countries have deforestation but less than the upper middle income group, and high-income
countries both experience reforestation.
Students can mention water pollution, sanitation