Trade and Globalization

 Understand how the subprime mortgage crisis was a moral hazard problem  Explain the difference between absolute advantage and comparative advantage

Subprime Mortgage crisis  Explain how the moral hazard problem helped create the subprime mortgage crisis  Focus  Banks  Investment banks  buyers

 According to the author how does trade make us richer?

 How does trade create losers? Please give some examples

 What is protectionism? In the long run how can it be harmful?

 The author claims trade lowers the cost of goods, which is the same as raising incomes. What does he mean?

 According to the author how does trade benefit poor countries?

 Do you agree with the author’s statement that trade is based off of voluntary exchange? Why or why not? Use examples

 What is the comparative advantage of workers in poor country?

Absolute Advantage  The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Comparative Advantage  The ability of a firm or individual to produce goods and/or services at a lower opportunity cost than other firms or individuals.