1. Explain how international trade is measured and what is included by category of trade. (Include sub-accounts and the relationship (equalities) between accounts, be able to find the value of an account or sub-account, using information on the other categories)

2. Using the Production Possibilities Frontier diagram, explain the comparative advantage

argument for free trade. Illustrate the impact of trade graphically (what is the maximum

achievable level of economic activity for the economy, with and without trade?). What

advantages do economists attribute to free trade policies? (Note: use the Production Possibilities Frontier and the Consumption Possibilities Frontier to illustrate comparative advantage and the gains from opening an economy to trade.)