1. Lecture 12 – Final Exam Review October 4th, 2010 http://www.slideshare.net/saark/ibe303-lecture-12

2. Final Exam Type: Multiple choice No. of questions: 50 Duration: 3 hours Grade: 50% of final grade Topics: Everything after midterm (from Lecture 5 onward)

3. International Trade Factor Endowments Heckscher-Ohlin Model Model assumptions Captial-Labor ratio Relative Factor Endowments Factor Prices Trade in Neoclassical Model Stolper-Samuelson Theorem

4. Post-Hecscher-Ohlin Theories of Trade Posner’s Imitation Lag Hypothesis Product Cycle Model Vertical Specilization Firm-focused Theories The Linder Theory The Krugman Model

5. Intra-Industry Trade Causes of intra-industry trade

6. Economic Growth and International Trade Trade effects of growth Production Growth Consumption Growth Sources of Growth Factor Growth Factor-neutral Growth in K Growth in L Cases Small country Large country

7. International Factor Movement Types of capital foreign investment Foreign Direct Investment (FDI) Foreign Portfolio Investment (FPI) Market equilibrium

8. The Instruments of Trade Policy Tariff

9. The Impact of Trade Policies Consumer Surplus Producer Surplus Trade Restrictions Partial equilibrium Small / Large country case General equilibrium Small / Large country case Arguments for Interventionist Trade Policies Strategic Trade Policy

10. Balance of Payment Growth of Trade Capital Movements BOP accounting

11. Foreign Exchange Market for Foreign Exchange Demand Supply Spot Market Arbitrage Absolute/Relative PPP Forward Market Hedging

12. Foreign Exchange and Financial Market Link between Foreign Exchange and Financial Markets Financial and Exchange rate adjustments The Eurodollar market International Bond Market International Stock Market Derivatives Exchange Rate Overshooting

13. Monetary And Portfolio Balance Approaches Monetary Approach BOP Money supply Money demand Monetary equilibrium Exchange rate Portfolio Approach BOP Money supply Money demand Monetary equilibrium Exchange rate

14. Price Adjustments and Balance-of-Payments Disequilibrium Price Adjustment mechanism Current Account under flexible rate Demand and Supply of foreign exchange The Marshall-Lerner Condition

15. Current Account and National Income Keynesian Income Model Price and Income Adjustments Internal and External Balance

16. Economic Policy Open economy under fixed exchange rate Money market equilibrium Real Sector equilibrium BOP equilibrium Fiscal policy Monetary policy Open economy under flexible exchange rate Fiscal policy Monetary policy Effects of shocks