Unit 1

If country X has imports valued at $4.5 trillion, exports valued at $2.5 trillion, and GDP valued at $8.3 trillion, calculate the index of openness for country X. Round to two decimal places.

84.34

The wealth creation that occurs via specialization and global trade according to comparative advantage can be accelerated by:

decreasing levels of protectionism.

Globalization

encourages specialization and trade via comparative advantage.

Which of the following is included in Germany's GDP? i. BMWs produced in a German owned factory in South Carolina ii. The value of the stocks sold on the German stock exchange, the Frankfurt Stock Exchange iii. China dishes produced by the English owned Wedgewood Company at a factory in Germany

iii

The Index of openness tends to be smaller for

larger economies

The ratio of a country's (imports + exports) to its total output (GNP or GDP)

provides a rough measure of the importance of international trade for an economy, if calculated for the United States would be less than 40, Is known as the index of openness.

The level of international trade has increased dramatically since World War II due to

reductions in trade barriers like tariffs, increased economic freedom, technological advances in transportation and communication,

GDP measures

the annual total value of all final goods and services produced within a nation's borders.

An international trade gravity model estimates a country's trade flows to other countries and predicts that any two countries will trade more with each other when:

their combined GNPs are larger and the geographical distance between them is smaller.

Per capita GDP is calculated as a country's GDP divided by its

total population