Globalisation, trade and payments
| English | 中文 | Pinyin |
|---|---|---|
| comparative advantage/kəmˈpærətɪv ədˈvæntɪdʒ/ | 比较优势 | bǐ jiào yōu shì |
| current account/ˈkʌrənt əˈkaʊnt/ | 经常账户 | jīng cháng zhàng hù |
A decision you can investigate
- Country A needs 2 hours to make a shirt and 4 for a radio. Country B needs 6 for a shirt and 6 for a radio.
- A is faster at both, but relative costs still differ.
Build the explanation
- Comparative advantage 比较优势 concerns lower opportunity cost, not lower absolute resource use.
- Trade protection can support infant industries or jobs, but may raise input costs, reduce choice and provoke retaliation.
Match the terms to their precise meanings.
Use these definitions in the particular context of Globalisation, trade and payments.
Work through the evidence
- In A, one radio costs two shirts; in B, one radio costs one shirt. B has comparative advantage in radios.
- A has comparative advantage in shirts: one shirt costs half a radio in A and one radio in B.
Which country has comparative advantage in radios?
In A, one radio costs two shirts; in B, one radio costs one shirt. B has comparative advantage in radios. A has comparative advantage in shirts: one shirt costs half a radio in A and one radio in B.
Test the limits
- The model assumes mobility within a country and a simplified production structure.
- Exchange-rate changes may not repair a current-account deficit quickly because contracts and elasticities matter.
Which caution belongs to this particular task?
The model assumes mobility within a country and a simplified production structure. Exchange-rate changes may not repair a current-account deficit quickly because contracts and elasticities matter.
The explanation in this lesson makes a conditional claim; relevant context and evidence still matter.
Exchange-rate changes may not repair a current-account deficit quickly because contracts and elasticities matter.
Apply and explain your answer
- Which country has comparative advantage in radios?
- Country B, because its opportunity cost is one shirt rather than two.
Choose the two statements supported by this lesson.
The concept and worked evidence support these claims; the stated limits rule out the universal shortcut.
Use the terms precisely
- comparative advantage: The ability to produce at a lower opportunity cost.
- current account 经常账户: A record including trade in goods and services and income flows.
In A, one radio costs two shirts; in B, one radio costs one shirt. B has comparative advantage in radios. A has comparative advantage in shirts: one shirt costs half a radio in A and one radio in B.
The model assumes mobility within a country and a simplified production structure. Exchange-rate changes may not repair a current-account deficit quickly because contracts and elasticities matter.
Comparative advantage concerns lower opportunity cost, not lower absolute resource use.