INTERNATIONAL TRADE - ECON 4431W

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

1.

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. Comparative Advantage always implies absolute advantage in trade, and vice versa.

b. When France imposes a tariff, it leads to no change in its Terms of Trade since it is a small country.

c. An increase in people's incomes always leads to an increase in the Terms of Trade for a country.

d. With free trade, the technologically advanced countries gain at the expense of the technologically backward countries.

e. With free trade, all countries gain.

f. In a 2X2X2 model, free trade leads to identical wage levels in both countries.

g. If a large country imposes an import duty, its Terms of Trade will increase.

h. In the Neo-Classical model with free trade, a country can produce only one good at a time.

i. According to the H-O Theory, free trade leads to more income and wage equality