1. Explain the importance of international trade to an open economy such as the UK 2. a) Define Comparative Advantage, Absolute advantage and Terms of Trade & Exchange Rate b) Assess the significance of comparative advantage, absolute advantage, the terms of trade and exchange rates to the UK economy 3. Assuming that the balance of payment of an imaginary country comprises the following main items (all figures in millions of £): exports of goods 400; imports of goods 500; government (invisibles) -150; other invisibles +200; investment and other capital flows -45. Describe the structure of the balance of payments and calculate the: Visible trade balance, Current balance and Balance for official financing. 4. What is Surplus and Deficit in an economy? a. Explain the terms 'surplus' and 'deficit' b. Explain the significance of long-term deficits to open economies