Critically discuss mercantilist trade policy compared to policy based on the principal of comparative advantage (25)
What were the mercantilist’s views on trade? How do they relate to the current ideology of protectionism? (7)
Critically evaluate Adam Smith’s theory of absolute advantage, outlining the assumptions for this theory to hold true in its purist form (18)
Discuss the theory of comparative advantage by David Ricardo.
What are the assumptions in its purest form?
How does this theory differ fundamentally from Smith’s theory of absolute advantage? (25)
Explain how the factor proportions theory improves on the Ricardian trade theory.
Explain why the theory may not hold perfectly in practice.
Briefly highlight some of the new theories that have emerged as explanations of international trade patterns (25)
Explain how the factor proportions theory can be used to explain the pattern of trade between two countries.
Outline the assumptions of the theory to hold true in its purest form.
Explain how subsequent tests of the theory have sought to contradict the original predictions of the theory (25)
Explain the welfare effects of tariffs in the case of a large country. Who gains and who loses?
Is it possible for a large country to be better off with a tariff than with free trade (25)
Compare and contrast the effects of a tariff and an import quota as alternative methods of protecting a domestic industry.
If a government of a small country wants to reduce the amount of textile imports to a specific quantity should it use a tariff or an import quota? Motivate your answer (25)
Explain the theories of intra industry trade (25)
Explain the domestic effects of a tariff using a graph, assume the country imposing the tariff is small (25)
A normal tariff applied to an imported commodity may overstate or understate the effective rate of protection. Explain how this might occur (15)
Evaluate the main arguments for and against protectionism (25) Question repeated twice!!
Describe and explain the various forms of regional economic integration agreements. Also name a describe an example of each (25)
Briefly explain the main forms of economic integration (15)
Discuss the trade creation and trade diversion which occur when a country joins a customs union. Can a trade diverting customs union result in trade creation (10)
Discuss the costs and benefits of multinational corporations to the home and host countries. Who gains and who loses? (25)
Multinational corporations do more harm than good in developing countries. Discuss (25)
Discuss the main principals underlying the operation of the world trade organisation
How does the WTO differ from its predecessor GATT (25)
Briefly explain the main functions of the WTO (10)
What were the Mercantilist’s views on trade? How do they relate to current ideology of protectionism? (7)
Critically evaluate Adam Smith’s theory of absolute advantage, outlining the assumptions necessary for the theory to hold in its purest form. What are the criticisms of this theory? (18)
Critically discuss the Heckscher-Ohlin theory of international trade. (25)
Using a well labelled diagram, explain the partial equilibrium effects of a tariff on a small country (25)