Activity 1: Formative Assessment

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1. What is the result of specialization and trade?
   1. production and consumption decrease
   2. production and consumption increase
   3. the nations lose trade shares in the market
   4. nations receive few benefits from trade
2. International trade is served by:
   1. specialization and economic interdependence
   2. tariffs and trade barriers
   3. currency exchange and exchange rates
   4. unlimited wants and resources
3. 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.

    

4. A nation decides what to produce by determining its absolute and comparative advantages. How does a nation determine its comparative advantage?