Trade, aid and exchange: Practice Questions

• a.

  Carbon dioxide emissions per capita and the unemployment rate.

• b.

  The number of active trade agreements and the population density.

• c.

  Military expenditure as a % of GDP and literacy rates.

• d.

  Life expectancy at birth and mean/expected years of schooling.

• a.They caused the total collapse of the banking system in Europe as all gold was sent to the Middle East and never returned.
• b.They led to a complete isolation of Europe from the rest of the world as all borders were permanently closed after the wars.
• c.They facilitated the reopening of Mediterranean trade routes, increasing European demand for Eastern luxury goods like spices and silk, which enriched Italian city-states.
• d.They resulted in the immediate adoption of a single global currency based on the Byzantine hyperpyron across all of Europe and Asia.

• a.

  Country X has a comparative advantage in cloth because its opportunity cost is lower.

• b.

  Country Y should specialize in cloth to maximize its efficiency relative to Country X.

• c.

  Country X has no incentive to trade because it has an absolute advantage in both goods.

• d.

  Country Y has a comparative advantage in cloth because its total production is lower.

• a.

  Primary products are immune to the effects of inflation, leading to stagnation.

• b.

  Raw materials have a higher value-added component than manufactured goods.

• c.

  International laws prohibit the trade of primary products to developed nations.

• d.

  Price volatility in global markets can lead to unstable export revenues and economic shocks.

• a.To ensure that all citizens had an equal distribution of wealth regardless of their contribution to the national economy.
• b.To accumulate national wealth, particularly gold and silver, by maintaining a positive balance of trade through exports and colonial exploitation.
• c.To promote global free trade by removing all tariffs and allowing foreign merchants to compete equally with domestic ones.
• d.To transition the national economy away from trade and focus entirely on self-sufficient agricultural production within the castle walls.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.

Write your answer out first, then check it against the worked solution.