SV"'S NNIMS

Jyoti Dalal School of Liberal Arts

Academic Year: 2022-2023

Program: B.A. Hobs Liberal Arts Year: Third Semester: VI

Subject: INTERNATIONAL ECONOMICS Time: 2hrs (2: Ooprito 4r:0 opeo

Date: ac /Ap6/ 2023 No. of Pages: fl2

Marks: 50

Final Examination
Instructions
I) Answer to each new question to be started on a fresh page.
2) Use of graph paper and simple calculator wherever app]icab]e is allowed.
3) Figul.es in bracket on the right hand side indicate full marks.

Attempt any rive out of six questions.

Q 1. Explain the rationale behind Ricardian Theory using an example and give its limitations. (10)

Q 2. An open economy is characterized by the following equations: (10)

Consumption (C ) = 60+0.9Yd
Investment Expenditure a) = 10
Government Expenditure (G) = 10
Tax (T) - 0
Exports (X) = 20
Imports (M) = 10+0.05Y

a) Detemine the equilibrium Income using above infomation.

b) Calculate the trade balance and state whether the trade balance is in surplus or
deficit.

Q 3. Explain the types of Balance of payments disequilibrium in detail, their causes and (10)
measures to correct them.

Q 4. The exchange rate of the British pound (£) in terms of the Hong Kong Dollar (S) is (10)
given by the demand and supply functions:
Qd -150 -5P
Qs - -25 + 9P
a. Calculate the equilibrium exchange rate.
b. Calculate the equilibrium quantity (in billions of British Pounds) traded.

Q 5. Argue in favour of and against free trade policy of lndia with china in 2024. (10)

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Q 6. The flgure below shows a country's domestic demand (Ddom) and supply curves (Sdom) (10)
for a product. Part of demand is satisfied by imports. The country is a price taker and the
world price for the product is given by Pw with the world supply curve given by Sw. A
tariff is then imposed on the product shown by the vertical difference between Sw and
Sw+t.

a) How much quantity is imported before the tariff is imposed?

b) How much quantity is imported after the tariff is imposed?
c) What area(§) represent(s) total consumer surplus before the tariff is imposed?
d) What area(s) represent(s) the loss in consumer surplus after tariff is imposed?
e) How much revenue does the government gain from the imposition of the tariff?

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