University of Washington                              Geography 349                     Autumn  2006

 

FIRST  IN-CLASS  TEST

 

Name:_________________________________

 

Please write your name above, and then answer each of the questions below, in the spaces provided.  The points total 40;  your score will be multiplied by 0.45 to yield your score out of 18 (the value of this test out of 100 points for the quarter).   The test should take 60-90 minutes;  you may write until 12:20.  Watch your spelling and grammar, and write legibly.

 

 

 

1.  [1 point]  According to the table below, in what year(s) did U.S. entities invest more in other countries than investors in other countries invested in the U.S.?

 

 

 

 

U.S. National Income and Product Accounts, 1933-2005 (selected years)

GDP is given in billions of current dollars
C = personal consumption expenditures, as a percent of GDP
I = private domestic investment, as a percent of GDP
G = expenditures and investment by Federal, state, and local governments, as a percent of GDP
X = exports as a percent of GDP
M = imports as a percent of GDP

Year

GDP

C

I

G

X

M

1933

$    56.2

82%

3%

15%

4%

3%

1945

223.2

54 

5 

42 

3 

3 

1965

719.1

62 

16 

21 

5 

4 

1973

1,382.6

62 

18 

21 

7 

7 

1987

4,692.3

66 

16 

21 

6 

11 

2000

9,817.0

69 

18 

18 a 

11 

15 

2005

12,455.8

70

17

19 b

11

16

a This 18% = 4% (Federal defense expenditures) + 2% (Federal non-defense expenditures) + 12% (state & local government expenditures)
b This 19% = 5% (Federal defense expenditures) + 2% (Federal non-defense expenditures) + 12% (state & local government expenditures)

2.  [6 points]  In the table below,

a)      Which row would be directly affected if the Chinese government sold U.S. government bonds?

b)      Which row would reflect the tuition payments of a Brazilian student at UW?

c)      Which row would reflect U.S. government interest payments on U.S. Treasury bonds owned by a U.K. bank?

d)      Which row would reflect your hotel and entertainment expenses in Vancouver BC (assuming that your income comes from the U.S.)?

e)      How is Row 76 calculated? 

 

f)        What’s the meaning or importance (or another phrase for) [ (39) + (40) + (55) + (70) ], where those numbers are row numbers from the table below?

 

 

U.S.  INTERNATIONAL  TRANSACTIONS, 2005
(all figures in millions of current U.S. dollars) 
Source:  Bureau of Economic Analysis,  International Accounts Data,  Balance of Payments Tables; http://www.bea.gov/bea/newsrelarchive/2006/trans206.xls

  1

Exports  of goods, services, income

1,749,892

  3

     Goods

894,631

  4

     Services (travel, royalties, private services)

380,614

12

     Income receipts (on U.S. assets abroad)

474,647

18

Imports of goods, services, income

-2,455,328

20

     Goods

-1,677,371

21

     Services (travel, transp, royalties, private services, defense exp. abroad)

-314,604

29

     Income payments (on foreign assets in U.S.)

-463,353

35

Unilateral transfers, net

-86,072

39

Capital account transactions, net

-4,351

40

U.S. assets abroad, net change

-426,801

51

     US FDI abroad, net change

 

55

Foreign assets in U.S., net change

1,212,250

64

     FDI into the US, net change

109,754

70

Statistical discrepancy

10,410

 

Memoranda

 

71

Balance on goods = (3) + (20)

-782,740

72

Balance on services = (4) + (21)

66,011

73

Balance on goods and services = (71) + (72)

-716,730

76

Balance on current account = (1) + (18) + (35) = 

- [ (39) + (40) + (55) + (70) ]

-791,508


3.  [3 points]  List three reasons for external (international) demand for US dollars.

a)

 

b)

 

c)

 

 

4.  [3 points]  Define:

a)      countervailing duty

 

b)      dumping

 

c)      subsidies (as a source of international trade negotiation and disputes)

 

 

 

5.  [12 points]  Write an essay[1] that presents the principal components of the basic, neoclassical theory of trade.  What strong assumptions underlie this basic theory:  regarding the goal of economic activity, the mobility of factors and products, the mobility and stability of production technology?  What are the sources of system-wide gains from trade?  What influences on the division of the gains from trade between two trading partners?  Be sure to define and make use of the concepts of absolute versus comparative advantage, factor-proportions theory, and the formula G1 = (a1/b2)(C2/C1) - a1/b1 . 



6.  [5 points]  According to the basic, neoclassical model of trade, what determines the intra-national distribution of gains and losses as a country moves from autarky to open trade?  (In other words, who gains, who loses, and why?)  Suggest a way to compensate the losers, and the difficulties in doing that.  Why should open trade of products lead toward “factor-price equalization” (what does that mean?), even if factors of production are not mobile internationally?


7.  [5 points]  Use your team’s bilateral trade case study to illustrate one principle of neoclassical trade theory, and then to illustrate one difficulty in applying the neoclassical theory to empirical patterns or policy. 

 

8.  [5 points]  Respond to ONE of the following two questions.

a)      While the product life cycle model (PLC) was developed to “explain” the Leontieff paradox (which was the finding that the production of US exports were more labor-intensive than the production in US sectors facing import competition), it contradicts two assumptions of basic neoclassical trade theory.  Define the PLC, and explain those two contradictions.

b)      What are the major reasons why (or ways in which) Batra disagrees with the applicability of neoclassical trade theory?

This page is not part of the exam credit, but it is a part of the project credit.  Please tell me about your experience with your Project 1 team.  (Two students were not a part of a team;  those two students do not need to answer this section).

 

 

a)      What was your team name?  (If you don’t remember for sure, approximate it).

 

 

b)      What was your process role?

 

c)      Did you think that role was useful for the team?  (I’m not necessarily looking for a “yes”!)

 

 

d)      How would you characterize your major contribution(s) to the team?  This could be substantive, process, or other.

 

 

 

e)      Identify one thing that you learned from (a) team member(s) – it could be something related to their task, it could be a suggestion they made for your task, it could be something about the way they conducted their process role.

 

 

 

 

f)        How many in-class meetings of your team did you have to miss?  (We met in teams most days).

 

 

g)      Did your team have to work around the repeated absence (more than twice) of any member(s)? 

 

 

 


[1] In this and the other essays, pay attention to syntax (how your sentences are put together), grammar, and spelling.  For example, watch “it’s” (which means “it is”) versus “its” (which is the possessive of “it”);  be careful whether you mean “there,” “their,” or “they’re”;  and note that the plural of “country” is “countries” but the possessive of “country” is “country’s.”