Activity 1: Formative Assessment
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- What is the result of specialization and trade?
- production and consumption decrease
- production and consumption increase
- the nations lose trade shares in the market
- nations receive few benefits from trade
- International trade is served by:
- specialization and economic interdependence
- tariffs and trade barriers
- currency exchange and exchange rates
- unlimited wants and resources
- Based upon your understanding of international trade, why should a nation pursue trading with other countries? Explain the potential benefits and costs from entering into trade with other countries.
- A nation decides what to produce by determining its absolute and comparative advantages. How does a nation determine its comparative advantage?