A financial crisis brought on by macroeconomic imbalances
A) is usually inevitable given underlying conditions.
B) often happens to countries with strong international positions.
C) is often preceded by capital inflows and an increase in foreign liabilities.
D) is usually the result of fragility in the banking sector.
Question 2
Comparative advantage has mixed results when it comes to predicting a country's trade patterns. Which of the following is FALSE?
A) There are many potential products an economy might export that use the same comparative advantage.
B) A large share of international trade is not based on comparative advantage.
C) Comparative advantage has proven completely incapable of predicting trade.
D) Comparative advantage is a dynamic concept, which means that the spread of technology, improvement in skills, and learning-by-doing may alter a country's comparative advantage over time.
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