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Saturday, April 21, 2018

BA 6th Semester Question Papers: International Economics (May' 2017)

2017 (May)
Course: 603
(International Economics)
Full marks: 80
Pass Marks: 32/24
Time: 3 hours
The figures in the margin indicate full marks for the questions
1. Choose the correct answer/Answers the following:
a)      The theory of comparative cost advantage assumes
                     i.            Labour theory of value.
                   ii.            Two countries, two commodities and two factors model of trade.
                  iii.            Transport costs as a factor influencing trade.
                 iv.            Increasing returns to scale of production.
b)      State the Heckscher-Ohlin theory.
c)       The equalization of actual gain with potential gain from trade requires.
                     i.            Tariff imposition.
                   ii.            Restrictions on trade.
                  iii.            Free trade.
                 iv.            Differences in domestic cost ratio
d)      The terms of trade of a country experiencing immiserizing growth.

                     i.            Deteriorate.
                   ii.            Improve.
                  iii.            Remain unchanged.
                 iv.            Result in larger volume of exports and imports.
e)      In a country’s balance of payments, balance of trade is a component of
                     i.            Balance of capital account.
                   ii.            Balance of current account.
                  iii.            Transfers.
                 iv.            None of the above.
f)       Protection is supported as it –
                     i.            Protects interests of all nations.
                   ii.            Leads to optimum use of world resources.
                  iii.            Leads to expansion of home market.
                 iv.            Provides safeguard against monopolies.
g)      The inflow of foreign capital increases due to
                     i.            Low interest rates.
                   ii.            High bank rates.
                  iii.            Anticipation of devaluation.
                 iv.            Recession in the economy.
h)      WTO came into existence as a result of which of the following negotiations?
                     i.            Kennedy Round.
                   ii.            Tokyo Round.
                  iii.            Uruguay Round.
                 iv.            Dillon Round.
2. Write short notes on any four of the following (within 150 words each):                            4x4=16
a)      Adam Smith’s principle of absolute cost advantages.
b)      Effect of export-biased economic growth in terms of trade.
c)       Arguments in favour of free trade.
d)      Mint parity theory.
e)      Bretton Woods’s system.
Answer the following (within 500 words each):
3. (a) Discuss with appropriate diagrams, the opportunity costs theory of international trade under conditions of increasing opportunity costs and decreasing opportunity costs.                                       6+6=12
(b) Discuss Mill’s theory of reciprocal demand. How did this theory improve the comparative cost advantage theory of Ricardo?                                               8+4=12
4. (a) Discuss Prebisch-Singer hypothesis of secular deterioration of terms of trade for the less developed countries.     11
(b) Explain Myrdal’s theory of backwash effect.                                                                11
5. (a) (i) Discuss the non-tariff barriers that a country imposes on trade.                                                6
(ii) Mention the unfavourable effects of FDI on the recipient country.                    5
(b) Analyze the consequences of globalization for a developing country like India.            11
6. (a) Define balance of payments. Explain the balance of payments theory of exchange rate determination.      2+9=11
(b) What is meant by fixed exchange rate? Give the arguments for and against the fixed exchange rates.         1+5+5=11
7. (a) Examine the functions of the International Monetary Fund. Discuss its role in enlarging international liquidity. 4+7=11
(b) Mention the objectives of the World Trade Organization. Discuss the positive and negative effects of World Trade Organization on Indian economy.                                             4+7=11

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