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International Economics I Question Paper

International Economics I

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2009

COURSE CODE: ECON 412
COURSE TITLE: INTERNATIONAL ECONOMICS I
STREAM: Y4S1
INSTRUCTIONS:
1. Answer question ONE and any other TWO questions.
QUESTION ONE
a) Briefly discuss the mercantilist philosophy of international trade. (10mks)
b) Write short notes on the following concepts.
i) Comparative advantage (2mks)
ii) Marginal rate of transformation (2mks)
iii) Equilibrium in isolation (2mks)
iv) Opportunity cost (2mks)
v) Leontief paradox (2mks)
c) Clearly explain why economists consider the Ricardian “Labour theory of value”
assumption to be invalid. (10mks)
QUESTION TWO
a) Clearly state and explain the two basic questions that the law of comparative
advantage attempts to answer. (5mks)
b) What do you understand buy the expression “open economy macroeconomics?”
(5mks)
c) Using an illustrative example, explain the exception to the law of comparative
advantage. (10mks)
QUESTION THREE
a) A survey of trade between Kenya and Malawi reveals that Kenya produces 8kg of
maize per man-hour whereas Malawi produces 1kg per man-hour. It is also
established that Kenya produces 6 metres of textiles per man-hour and Malawi
produces 7 metres per man-hour.
i) Illustrate the above production relations. (3mks)
ii) State and explain the theory of international trade that relates to the trade
transactions between these two nations. (5mks)
b) Explain the following factor endowment terms.
i) Factor intensity (5mks)
ii) Factor abundance (5mks)
c) use a suitable graph to show the shape of the production frontiers of two nations
under factor abundance assumptions. (2mks)
QUESTION FOUR
a) Explain the beneficial effects of international trade towards the economic
development of Third world nations. (10mks)
b) Identify and briefly comment on the arguments usually advanced by developing
countries for a New International Economic Order (NIEO) (10mks)
QUESTION FIVE
a) State and explain the features of each of the main types of protection that are
employed by countries throughout the world. (10mks)
b) Explain the disadvantages of protectionism to the Kenyan economy.
(8mks)

International Economics I Question Paper

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