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

1. Under free trade, one country gains and the other loses.

2. The theory of Comparative Advantage states that free trade benefits all countries.

3. The Theory of Absolute Advantage states that trade arises due to different amounts of labor in the country.

4. The Neoclassical theory states that trade arises due to different amounts of consumption and production in both countries.

5. Under free trade, prices fall in all countries, so trade becomes cheaper.

6. A country should reduce its imports and increase exports if it wants to get richer.

7. Adam Smith recommended very strong government regulation of trade.

8. A country with a higher labor productivity than another country will have a comparative advantage in the production of all goods in the country.

9. The Theory of Absolute Advantage explains producer and consumer equilibriums under free trade.

10. The offer curve of a country shifts inwards when incomes rise.