Answer the following statements true (T) or false (F)
1.The theory of reciprocal demand asserts that as the U.S. demand for Canadian wheat rises, the equilibrium terms of trade improves for the United States.
2.Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos. As the Canadian demand for wheat increases, Canada's equilibrium terms of trade improves.
3.The theory of reciprocal demand best applies when two countries are of equal economic size, so that the demand conditions of each nation have a noticeable impact on market prices.
4.The theory of reciprocal demand best applies when one country has a "large" economy and the other country has a "small" economy
5.If two nations of approximately the same size and with similar taste patterns participate in international trade, the gains from trade tend to be shared about equally between them.
1.False
2.False
3.True
4.False
5.True
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