Question

Question 1

An absolute advantage is a necessary condition for gains from trade. Yes or no?

Question 2

For trade to take place, it is sufficient for a Country to have an
absolute advantage in the production of some other commodity. Yes or no?

Question 3

Assume the exchange rate was fixed at 1 Canadian dollar for 1 American dollar. Would the following events cause pressure on the Canadian dollar to Appreciate or Depreciate?

Americans are spending their summer vacations on Canada's east coast.

Question 4

Assume the exchange rate was fixed at 1 Canadian dollar for 1 American dollar. Would the following events cause pressure on the Canadian dollar to Appreciate or Depreciate?

Canadians are crossing the border to purchase their new cars in the United States.

Question 5

Assume the exchange rate was fixed at 1 Canadian dollar for 1 American dollar. Would the following events cause pressure on the Canadian dollar to Appreciate or Depreciate?
A substantial increase in the interest rate in Canada relative to the U.S.

Answer 1