Explain the theory ofcomparative advantage. List the core assumptions of this theory. How realisticare these assumptions? Your answer should assess any four (4) of theseassumptions. Briefly explain...

WRITTEN ASSIGNMENT
Table of contents
Discussion 1    3
Discussion 2    3
Discussion 3    4
GDP Table and Graph    6
References    8
Discussion 1
According to David Ricardo's theory of comparative advantage, which was initially put forward in 1817, nations should focus on providing commodities and services in which they have a lower opportunity cost than other nations. To put it another way, a nation should concentrate on manufacturing the commodities and services for which it is comparatively more efficient while trading with other nations for those that it is unable to produce as effectively. According to this hypothesis, nations can still gain from trade even if one country has a clear edge in manufacturing all items. The theory of comparative advantage is predicated on four fundamental premises that –
· there are two nations and two items,
· labor is the only component of production,
· labor is homogenous within a country &
· there are no trade ba
iers or transportation expenses.
These presumptions streamline the analysis, but they don't adequately capture how complicated the real world is. The notion that labor is uniform across nations is one that is unfounded. In actuality, workers' talents and skills vary, which has an impact on their productivity and capacity to generate a variety of things. The idea that there are no trade ba
iers or transportation costs is another unfounded assumption (Coscieme et al., 2020). Transport expenses, tariffs, and other trade restrictions can really change trade patterns and impact a country's comparative advantage. These presumptions have important ramifications for global trade. The theory of comparative advantage may not be able to anticipate the benefits of trade if its underlying premises are inco
ect. For instance, even if a nation has a comparative advantage in producing a given commodity, trading that good may not be cost-effective due to high transit expenses. Similar to this, if labor within a nation is not uniform, the theory might not be able to predict which products a nation should focus on producing. To sum up, the theory of comparative advantage is an effective tool for comprehending the advantages of global commerce. But its presumptions don't match the complexity of reality. As a result, when applying the theory to actual circumstances, policymakers and analysts must be cautious to take into consideration all of the variables that may have an impact on trade patterns and comparative advantage.
Discussion 2
One of the most important economists of the 20th century, John Maynard Keynes, held that the market economy is intrinsically unstable and prone to slumps in the economy and high unemployment. Keynes believed that market economies may undergo "animal spirits" and i
ational exuberance that would result in excessive optimism and investment, followed by intervals of pessimism and a lack of investment. Economic volatility as a result of this may cause...