Question:

1. Long-term Growth, International Trade & Globalization

a. In terms of understanding the importance of trade to an economy, the most important consideration is the trade balance - deficit or surplus.i. True or False? ii. Why?

b. The US is the largest exporter in the world. The US has run a persistent trade deficit (importing more than we export) for over two decades. Explain how both these statements can be true?

c. A country can only have a comparative advantage in those products and services that it produces at the lowest absolute cost (for a given quality).i. True or False? ii. Why?

d. Comparative advantage is the ability of an individual, a firm, or a country to produce a good or service at a lower i._ cost than competitor,ii. Briefly Explain?

e. In the "Gains from Trade" framework, the win-win proposition obviously means that everyone wins from international trade.i. Yes or No? ii. Why or why not?

i. Briefly explain and ii. quote how Charles Wheelan pulls together productivity, specialization, and trade as the "formula" for a country to create wealth

Additional Information:

This question is from economics, particularly to international economics and it is deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade scenario and Charles Wheelan's quote are answered.