International Economics IB2013b/IB2013c
Final Exam (90 mins)

MULTIPLE CHOICE QUETIONS (circle the correct answers) 1. The term "gains from trade" describes: a. Producer surplus. b. The fact that when two countries trade, both are better off. c. Profits made by businessmen involved in international trade. d. Consumer surplus. e. The income of middlemen in a transaction. 2. In its most basic form, the gravity model says that the most important factors that describe the amount of trade between countries are a. differences in the amount of workers and physical capital between countries. b. differences in wages and technology between countries. c. the cultural affinity between the countries and the existence or lack of a common language. d. the tariff barriers between the countries and the costs of transportation. e. the amount that the countries produce and the distance between them 3. Evidence shows that f. the amount of trade that a country undertakes is not related to the number of multinational corporations in that country. g. the amount of trade that a country undertakes is not related to its geography. h. the effect of borders is not important when comparing international trade with trade between regions within a country. i. the amount of trade between countries is not related to the cultural affinity between the countries. j. countries farther apart have less trade between them on average. 4. In contrast to 50 years ago, most exports from low and middle income countries are now classified as k. dairy products. l. mineral products. m. services. n. agricultural products. o. manufactured products. 5. Gross domestic product measures a. the gross profits from all final goods and services produced in an economy. b. the total value of all final goods and services produced within