1. Canada is a large trading partner of U.S. This is not reasonable according to theGravity model. ( )2. Land and labor are used to produce two products, a land abundant country increasesthe labor supply, and then this would improve the country’s terms of trade. ( ) 3. Free trade is beneficial only your country is strong enough to stand up foreign competition. ( ) 4. When th relative price of cheese in terms of wine on the world market is higher the the opportunity cost of cheese in terms of wine in Home, but lower than the opportunity cost of cheese in Foreign, Home and foreign will specialize in the production of cheese, no wine production according to Ricardian model. ( ) 5. Venezuela is the richest country in petroleum in the world and mainly exports oil, a technological advance in the use of new energy makes it better off. ( )6. Official debt forgiveness should be recorded in financial account of the balance payments. ( )7. Overshooting refers to the phenomenon that the long-run response of exchange rate to a disturbance is greater than the short-run response. ( )8. Exchange rate should be proportional to the domestic price level and conversely proportional to foreign price level according to purchasing power parity. ( )9. The DD schedule shows that the equilibrium output will decline in the short run when the exchange rate rises. ( )10. All else equal, an increase in the money supply of home country will raise itsoutput and depreciate its currency in the short run. ( )