INTERNATIONAL TRADE EXAM SCRIPT
FINAL PAPER 2026 FULL SOLUTION
QUESTIONS AND ANSWERS
●● What are imports? Answer: Goods and services bought domestically
but produced in other countries.
●● What are exports? Answer: Goods and services produced
domestically but sold in other countries.
●● Who famously argued against tariffs and protectionist policies in
1776? Answer: Adam Smith.
●● What is globalization, according to Prof. Don Boudreaux? Answer:
The advance of human cooperation across international borders.
●● How is the "trade openness index" defined? Answer: The sum of
world exports and imports, divided by world GDP.
●● When did international trade rise sharply? Answer: After Adam
Smith's 1776 treatise and even more after WW2.
, ●● What are two reasons for the sharp increase in international trade
after WW2? Answer: Falling shipping/communication costs and more
nations adopting trade-friendly policies.
●● How has international trade's importance to the U.S. economy
changed since 1970? Answer: Both imports and exports have steadily
risen as a fraction of the US economy.
●● Which country is the world's largest exporter? Answer: China, with
11.0 percent of world exports.
●● What percentage of world exports does the USA account for?
Answer: 9.8 percent.
●● Why does international trade make up a relatively small part of the
US economy compared to smaller countries? Answer: Due to the relative
size of the US economy, which can produce many things domestically.
●● What are the four sources of comparative advantage mentioned in
the text? Answer: Climate/natural resources, relative abundance of
labor/capital, technological differences, and external economies.
●● How can climate and natural resources be a source of comparative
advantage? Answer: Some nations' climate and resources are better
suited to produce particular goods, especially agricultural.
FINAL PAPER 2026 FULL SOLUTION
QUESTIONS AND ANSWERS
●● What are imports? Answer: Goods and services bought domestically
but produced in other countries.
●● What are exports? Answer: Goods and services produced
domestically but sold in other countries.
●● Who famously argued against tariffs and protectionist policies in
1776? Answer: Adam Smith.
●● What is globalization, according to Prof. Don Boudreaux? Answer:
The advance of human cooperation across international borders.
●● How is the "trade openness index" defined? Answer: The sum of
world exports and imports, divided by world GDP.
●● When did international trade rise sharply? Answer: After Adam
Smith's 1776 treatise and even more after WW2.
, ●● What are two reasons for the sharp increase in international trade
after WW2? Answer: Falling shipping/communication costs and more
nations adopting trade-friendly policies.
●● How has international trade's importance to the U.S. economy
changed since 1970? Answer: Both imports and exports have steadily
risen as a fraction of the US economy.
●● Which country is the world's largest exporter? Answer: China, with
11.0 percent of world exports.
●● What percentage of world exports does the USA account for?
Answer: 9.8 percent.
●● Why does international trade make up a relatively small part of the
US economy compared to smaller countries? Answer: Due to the relative
size of the US economy, which can produce many things domestically.
●● What are the four sources of comparative advantage mentioned in
the text? Answer: Climate/natural resources, relative abundance of
labor/capital, technological differences, and external economies.
●● How can climate and natural resources be a source of comparative
advantage? Answer: Some nations' climate and resources are better
suited to produce particular goods, especially agricultural.
