1. Consider the following statement: "International trade is more important to the Canadian economy than to most other economies." Is the statement above true?

a. This statement is mostly true. There are only a few countries, like the Netherlands, Germany and Mexico, which export and import much higher proportions of their GDP than Canada.

b. The statement is true because the Canadian economy relies on low priced imports to keep inflation under control.

c. The statement is true because Canada is in the top 15 largest exporters of goods and services in the world.

d. The statement is false. Since Canada has an absolute advantage in the production of most goods, itdoesn't gain from trade.

2. Some of those arguing against the Canadian government's efforts to increase trade ties with other regions and countries state that removing trade barriers will mean losing jobs in Canada. Using the economic concept of comparative advantage, explain under what circumstances it would make sense for Canada to produce all of a specific good say, T-shirts in Canada.

Due to _____ advantage principle, some jobs in Canada will be lost to countries that have lower _____ costs in producing certain goods and services.

3. What is protectionism? Protectionism is

a. the process of countries becoming more open to foreign trade and investment.

b. the selling of a product for a price below its cost of production.

c. trade between countries that is without government restrictions.

d. the use of trade barriers to shield domestic firms from foreign competition.

e. a situation in which a country does not trade with other countries.