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"economics"exercise:International trade
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Questions 1:
The production capabilities of two countries for computers and phones is as follows:
Country X is best described as having a comparative advantage over Country Y for producing:
A 、computers.
B 、phones.
C、 phones and computers.
Questions 2:
A country’s international transactions accounts data for last year are presented in its domestic currency:
The current account balance is closest to:
A 、–4,087.
B、 –4,216.
C 、–4,345.
View answer resolution
【Answer to question 1】A
【analysis】
A is correct. A country has a comparative advantage if its opportunity cost for producing a product is less than its trading partners: the cost of a computer in units of phones is lowest for Country X.
Country X has an absolute advantage over country Y in producing both computers and phones.
B is incorrect because Country Y has the higher opportunity cost in making phones.
C is incorrect because Country Y has a comparative advantage in making phones. lowest for Country X.
【Answer to question 2】A
【analysis】
A is correct.
C is incorrect. It mixes up the direction of flow for the income payments and receipts and the unilateral transfers
Exports + Income payments made + Unilateral transfers paid = 10,000 + 1,107 + 2,519 + 1,107 = 13,626
Imports + Income payments received + Unilateral transfers received = 14,216 + 3,409 + 346 = 17,971
13,626 – 17,971 = –4,345
B is incorrect. It is simply Exports – Imports: 10,000 – 14,216 = –4,216
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