Question

1) The implementation of the trade adjustment assistance program

a. reduced the cost of those harmed by free trade policies

b. increased government revenue

c. reduced the cost of goods imported

d. decreased support to free trade policies

2) Trade can affect a nation’s income and its economic well-being through the following channels

a. lower exchange rates

b. specialization and exchange according to comparative advantage

c. increasing government revenue

d. decreasing returns to scale

3) According to the Hecksher-Ohlin model, countries must

a. specialize on what they are able to produce at a lower cost

b. specialize on labor-intensive industries

c. specialize on sectors that use equal amounts of capital and labor

d. specialize on sectors whose production use its more abundant input

Answer 1

1 (a) the implementation of trade adjustment assistance program would most likely reduce the cost of those most affected by free trade policies- the assistance is given to workers,firms because they shouldn't bore the brunt of increasing import felt by some firms.

2 (b) through specialisation and exchange according to comparative advantage,trade can affect the nation's income and economic well-being because it allows to export the product which country can produce efficiently with lower opportunity cost.

3(d) Hecksher ohlin model states that the country must specialise on sectors whose production uses its more abundant input.