international trade theory An economy grows and the country wants to trade more after the growth. What can we expect happens to the terms of trade in this case, assume that the growth is caused by a proportionally greater increase in the supply of labour than of capital and that the growth in labour is larger than the economic growth?

international trade theory An economy grows and the country wants to trade more after the growth. What can we expect happens to the terms of trade in this case, assume that the growth is caused by a proportionally greater increase in the supply of labour than of capital and that the growth in labour is larger than the economic growth?

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter21: International Trade And Comparative Advantage

Section: Chapter Questions

Problem 6DQ

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The United States exports corn and aircraft tothe rest of the world, and it imports oil andclothing from the rest of the world. Do youthink this pattern of trade is consistent with theprinciple of comparative advantage? Why orwhy not?
According to David Ricardo, O A. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O B. Countries should strive to develop their absolute advantage to benefit from trade with other countries O C. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OD. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve
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If all countries follow a policy of free trade, economists predict that O a. each country will export goods at which it has a comparative advantage at producing and import goods at which it has a comparative disadvantage at producing Ob each country will export goods at which it has a comparative disadvantage at producing and import goods at which it has a comparative advantage at producing Oc there will be no trade between countries - that is, no international trade taking place Od rich countries will be made poorer by trade with poor countries O e. poor countries will be made even poorer by trade with rich countries
21. According to David Ricardo, O A. If countries specialize where they have a comparative advantage and trade, all groups in their economies will benefit equaly OB. If countries specialize where they have a comparative advantage and trade, their efficiency and standard of living can improve O C. If countries specialize where they have an absolute advantage and trade, their efficiency and standard of living can improve O D. Countries should strive to develop their absolute advantage to benefit from trade with other countries
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A. Did you follow the still ongoing discussion about free trade in the recent election cycle? Do you thinkthat the USA is tending toward a mercantilist approach and likely to impose restrictions on foreign tradeover the next few years?B. Do you agree or disagree with Adam Smith that we are better off with some form of free trade, thanwould be the case if each country raised or lowered tariffs based on its own economic needs and politicalphilosophy? Provide a logical reason for your answer.Not at all Somewhat Completely1 2 3 4 5 6 7 8 9 10C. Thomas Freedman made the following statement in the “World is Flat”. He maintains that technologymakes it possible to compete with, or collaborate with anyone, anywhere in the world. Globalization, heargued is both inevitable and desirable. The winners says Freedman, will be the countries andcompanies that can respond quickly to change and that the loser will be those who are slow to do so.“Whatever our political and philosophical points of view we…
The economic basis for trade is O none of these. O speculative attacks. O insourcing. O comparative advantage. O the race to the bottom.
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