Answer Happy

II. Answer 3 of the following 4 questions. Each question is worth 20 points. Provide a diagram if required. 1. A) Discuss the relationship between trade and economic growth. What are the key channels through whichtrade can contribute to growth? What are the difficulties in estimating the causal relationship between trade and growth? B) As a a result of the pandemics world trade volumes significantly diminished. Discuss the implications of this for economic growth of 'poor' and 'rich' countries. 2. A) Summarize the benefits of the Canada-US Free Trade Agreement to Canada and the USA. B) As a result of the pandemic trade volumes between Canada and the U.S. have been significantly reduced. Discuss the implication of this for the welfare of producers and consumers. Assume that the demand for goods in Canada will recover faster than trade volumes. 3. A) Outline the basic predictions from the model of outsourcing. Provide relevant diagrams. B) As a result of the pandemics, many international supply chains, including Canada-US and Canada-China supply chains are broken. Discuss implications of this for Canadian producers, high-skilled and low-skilled workers. Assume that demand for goods recovers faster than broken supply chains. 4. A) Discuss factors that affect FDI flows. Who benefits and who loses from FDI inflows into a home country? Base your answer on theoretical models, as well as on findings from empirical studies discussed in class. B) What effect would the pandemic have on FDI flows into Canada in the short and medium run (1-10 years). What types of FDI will be most affected, and why? Who will benefit and who will lose from the expected changes in FDI?