2017 (May)
ECONOMICS
(Major)
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:
- The theory of comparative cost advantage assumes
- Labour theory of value.
- Two countries, two commodities and two factors model of trade.
- Transport costs as a factor influencing trade.
- Increasing returns to scale of production.
- State the Heckscher-Ohlin theory.
- The equalization of actual gain with potential gain from trade requires.
- Tariff imposition.
- Restrictions on trade.
- Free trade.
- Differences in domestic cost ratio
- The terms of trade of a country experiencing immiserizing growth.
- Deteriorate.
- Improve.
- Remain unchanged.
- Result in larger volume of exports and imports.
- In a country’s balance of payments, balance of trade is a component of
- Balance of capital account.
- Balance of current account.
- Transfers.
- None of the above.
- Protection is supported as it –
- Protects interests of all nations.
- Leads to optimum use of world resources.
- Leads to expansion of home market.
- Provides safeguard against monopolies.
- The inflow of foreign capital increases due to
- Low interest rates.
- High bank rates.
- Anticipation of devaluation.
- Recession in the economy.
- WTO came into existence as a result of which of the following negotiations?
- Kennedy Round.
- Tokyo Round.
- Uruguay Round.
- Dillon Round.
2. Write short notes on any four of the following (within 150 words each): 4x4=16
- Adam Smith’s principle of absolute cost advantages.
- Effect of export-biased economic growth in terms of trade.
- Arguments in favour of free trade.
- Mint parity theory.
- 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
Or
(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
Or
(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
Or
(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
Or
(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
Or
(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