EC4333 Sample Exam
2006-10-30
This is a sample exam for EC4333, Economics of European Integration, and is being given under the exam guidelines of the University of Limerick. The format, and only the format, of the Christmas exam will be the same. I reserve the right to examine any material covered in the course. There are ten short questions which must be answered, and 4 longer questions, of which you must answer three of four. The total marks available are 125. Please answer the questions in the booklets provided. Name: Student Number: Please answer all ten questions below. 1. (5 points) Define what a ‘tariff’ is. 2. (5 points) Is there perfect labour mobility across the EU? Should there be? 3. (5 points) What are the possible ways in which EU integration could impact on the long run growth rate of member states? 4. (5 points) Briefly describe the economic effects of the CAP on farmers in developing countries. 5. (5 points) The EU has elements of Federalism in its political structure. What are these elements, and what elements of a federal state are missing? 6. (5 points) Briefly describe three possible gains from entering an optimal currency area. 7. (5 points) Has price dispersion across the EU decreased or increased for a representative bundle of goods as measured by the HICP? 8. (5 points) Does the EU reduce transactions costs? If so, how? 9. (5 points) Define what you mean by ‘convergence’, and give an example. 10. (5 points) Define ‘trade diversion’.
EC4333 Please answer three out of four questions in this section.
Sample Exam
1. (25 points) When the original six members founded the EEC trade creation dominated trade diversion. When Greece, Portugal and Spain joined the opposite occurred - trade diversion was larger. Carefully explain why you think this occurred using the standard analysis of trade creation and trade diversion. 2. (25 points) Explain why firms having some form of monopoly power can distort the market away from the most efficient allocation of resources. Give two examples of how the increased competition from closer EU integration will reduce this type of inefficiency. 3. (a) (5 points) Write down the two fundamental equations of the Solow growth model, briefly explaining each symbol, and graph their relationship. (b) (20 points) Use the Solow growth model to explain how one-off efficiency gains due to closer EU integration might be amplified by an increase in investment and savings. 4. (a) (9 points) What are the three main criteria for an optimal currency area to function? (b) (10 points) Are there costs to adopting an optimal currency area stance to monetary policy? If so, what are they, and how do they come about? (c) (6 points) Briefly describe the Samuelson-Balassa effect of productivity growth differentials on inflation.
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