The answer is no, if you can answer the following questions (drawn from my list of study questions for monday's midterm exam):
1. Discuss why different countries may end up having different levels of openness (measured by shares of trade in GDP) even if they follow free-trade policies.
2. The gains from trade are larger, the larger (i) the difference between autarky and world relative prices; and (ii) the volume of trade under free trade. Discuss and explain.
3. Using the data below, and some “reasonable” elasticities, provide your best guess as to the real income gain that would accrue to each country if their tariffs were eliminated altogether. Interpret your results.
average import tariffs
4. Even if countries have identical preferences and have access to identical, state-of-the art technologies, they will have different patterns of comparative advantage and can gain from trade with each other. Discuss why this sentence is true or false.
5. An economist has written “our country’s exposure to trade (share of trade in GDP) is too small for trade to exert strong effects on our factor prices.” Discuss whether you agree with the logic of this statement, and under what conditions it would be false.
6. Much of South Korea’s industrial subsidies went to industries that were not the best-performing in terms of TFP. Some economists have argued that this is evidence that such policies have not made a positive contribution to the economy’s performance. Discuss whether this conclusion follows from the premise.
7. "A reduction in import tariffs has the same effect on an economy’s real income as an equi-proportionate decline in the transport costs that its importers have to pay." True or false?
8. "It is possible for a country to become worse off when another country liberalizes its trade." True or false?
Well, students in the course learn other stuff too--I hope!