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7. Overshooting refers to the phenomenon that the long-run response of exchange rate to a disturbance is greater than the short-run response.

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6. Official debt forgiveness should be recorded in financial account of the balance payments.

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.

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.

3. Free trade is beneficial only your country is strong enough to stand up foreign competition.