INTERNATIONAL TRADE - ECON 4431W

Textbook: INTERNATIONAL ECONOMICS by Appleyard and Field (9th edition; McGraw Hill)

2.

Mention if the following statements are True or False.

Explain clearly WHY YOU CHOOSE THE ANSWER, using concepts and trade theories with diagrams if needed.

Please base your answers on the trade theories

a. Free Trade is always beneficial for a country.

b. Both the Ricardian and H-O model predict that the pattern of trade is determined largely by country differences in productivity.

c. The autarky relative price ratio (X to Y) of 35 in Nigeria and of 70 in Egypt implies that Egypt has a comparative advantage in the production of good Y.

d. Comparative Advantage leads to absolute advantage in trade.

e. When UK imposes a tariff, it leads to no change in its Terms of Trade. (use Offer Curves)

f. A change in consumer's preferences always leads to an increase in the Terms of Trade for a country.

g. With free trade, the industrialized countries gain at the expense of the agricultural countries.

h. In a 2X2X2 model, free trade leads to identical rental rate levels in both countries.

i. If a large country imposes an import quota, its Terms of Trade will increase.

j. In the Neo-Classical model in autarky, a country can produce only one good at a time.

k. According to the H-O Theory, free trade leads to wage equality.