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According to David Autor, what is the impact of trade among consenting nations on national GDP

It raises the GDP in all participating nations.

How are the benefits of trade characterized at the individual level versus the aggregate level

They tend to be small at the individual level but large in aggregate.

Trade grows the 'national pie,' meaning no one necessarily needs to have a _____ slice

Smaller

What role do policymakers play in managing the gains from international trade

They use various levers to ensure gains are more broadly shared.

What is the primary risk of trade if there is no policy intervention

It will almost necessarily harm some individuals and industries.

In what way are the adverse impacts of trade distributed across a population

They are highly concentrated among specific worker groups and locations.

How do inter-industry linkages affect trade-induced employment impacts

They magnify impacts by creating adverse spillovers to other sectors.

What is the author's critique of current trade adjustment programs

They are too small to be economically consequential.

International trade integration is described as creating diffuse benefits and _____ costs

Concentrated

Which historical event overturned the 'benign view' of trade's limited impact on developed countries

The China Shock

What policy should be modernized to mitigate harms for trade-impacted industries

Trade adjustment programs

Name one specific type of insurance recommended for workers displaced by trade

Wage insurance

What US tax credit is cited as a model for work-contingent wage support for displaced workers

Earned Income Tax Credit (EITC)

According to David Autor's 2019 research, which educational group experienced the highest cumulative change in real weekly earnings since 1963

Graduate degree holders

For working-age men, which educational group saw a negative cumulative change in real weekly earnings between 1963 and 2017

High school dropouts

In the context of occupational employment shares from 1970–2016, which category saw the most significant decline

Production

Which two occupational categories saw the largest positive percent changes in employment shares since 1970

Professionals and Technicians

Since 1945, what has been the long-term trend of manufacturing as a share of total US nonfarm employment

A steady and continuous decline.

When did the total number of persons employed in US manufacturing reach its historical peak

The late 1970s

According to McKinsey Global Institute, what percentage of occupations have at least 30% of work activities that could be automated

60%

What factor, fueled by technological progress, could increase the demand for work despite automation

Productivity growth

By 2030, how many workers globally might need to switch occupational categories due to automation

75 million to 375 million

What specific human skills are expected to become more important as a result of automation

Social and emotional skills, creativity, and high-level cognitive capabilities.

In the example of personal computers, technology created more jobs than it destroyed, primarily _____

Outside the industry itself

Regarding the personal computer example (1970–2015), which industry category saw the largest job creation

Computer-utilizing industries (Utilizers)

Which industry's jobs were directly destroyed by the rise of personal computers

Typewriter manufacturing

In the automotive example (1910–1950), which group within the 'Utilizers' category saw the highest job growth

Truck and tractor drivers

What was the net percentage of the 1950 civilian labor force created by automotive technology

Approximately 11%

Most trucking businesses in the US fall into which firm-size category

Nonemployer (self-employed)

In the Acemoglu and Restrepo framework, what is the 'displacement effect' of automation

The reduction in the demand for labor, wages, and employment due to task automation.

What is the 'productivity effect' in the context of automation and labor demand

Lower costs in automated tasks increase demand for labor in nonautomated tasks.

How does 'capital accumulation' serve as a countervailing force to automation's displacement effect

New capital requires human labor to design, produce, sell, and repair it.

Define the 'deepening of automation' as a labor-demand force

Increased productivity of machines in tasks already automated, which can raise demand for labor.

What is the 'reinstatement effect' in labor market theory

The creation of new tasks that increases the demand for labor and counterbalances displacement.

Why might the sum of countervailing forces (productivity, capital, deepening) be insufficient to help workers

They may not be large enough to prevent the labor share of national income from falling.

According to Acemoglu (2021), how can AI facilitate 'behavioral manipulation' by firms

By using big data to identify consumer biases and push them toward utility-reducing choices.

In terms of labor market harms, AI may lead to a loss of economies of scope in _____

Human judgment

How does unregulated AI potentially threaten democracy through social media

It creates echo chambers that propagate false information and polarize society.

What 'Big Brother' effect is associated with unregulated AI technology

The increased ability for governments to monitor and eliminate dissent.

According to Acemoglu (2021), the economic and social harms of AI are avoidable if the technology is _____

Regulated

Which educational group's real earnings have been most stagnant or declining since the 1980s

High school dropouts

What is the primary reason labor market adjustments to trade are often slow

Weaknesses and amplifying forces like displacement concentration impede the adjustment.

Under the midpoint automation scenario for 2030, what percentage of the global workforce must transition occupations

3% to 14%

Which specific industry's decline was cited as a selection for large sector employment shifts in India during the late 1980s

Agriculture

How does the 'reinstatement effect' specifically assist displaced workers

It creates a larger pool of new tasks where they can be employed.

What dark side of AI involves firms taking more consumer surplus through price discrimination

Pricing violations

What is the predicted effect of AI on the power balance between workers and employers in the workplace

Workers may become less powerful and more dispensable.

Name one example of 'new tasks' created in the 19th and 20th centuries to offset automation in textiles

Design, engineering, or back-office management.

According to FRED data, what happened to manufacturing employment numbers during the 2008 financial crisis

They experienced a sharp and significant drop.

In the trucking industry, 'Specialized freight trucking' typically has higher _____ per employee compared to local freight

Payroll

In the context of macroeconomics, what does a 'closed economy' assume regarding international interactions

It assumes there is no trade or capital flows across national borders.

What is the primary objective of Topic 8 regarding the macroeconomic model developed in previous topics

To extend the closed economy model to study the impact of shocks and policy in an open economy.

Which account records international trade in goods and services such as cars, electronics, and college education

The Current Account.

What type of activities are recorded in the Capital and Financial Account

Cross-border capital flows, including purchases of Treasury bonds, real estate, equities, and Foreign Direct Investment (FDI).

What is the fundamental accounting relationship between the Current Account (CA) and the Capital/Financial Account (KFA)

CA + KFA = 0.

If a country has a trade deficit, what must be true about its capital flows according to the Balance of Payments identity

Capital must be flowing into the country (KFA > 0).

Which specific balance measures the net exports of goods only

The merchandise trade balance.

According to the slides, how does the U.S. merchandise trade balance typically compare to its services balance

The U.S. has a sizable deficit in goods and a modest surplus in services.

Current Account (CA)

CA = NX + NFI, where NX is net exports and NFI is net foreign income.

In Balance of Payments accounting, how is a Ford vehicle exported from the U.S. to Germany recorded

As a positive entry in the Current Account.

In Balance of Payments accounting, how is a Porsche imported from Germany to the U.S. recorded

As a negative entry in the Current Account.

Why does the U.S. typically maintain a modestly positive Net Foreign Income (NFI)

Primarily due to the profits generated by U.S. multinational corporations.

Which country is currently identified as the largest borrower and debtor nation in the world

The United States.

What is the term for the balancing item used to account for measurement issues in the double-entry Balance of Payments system

Statistical discrepancy.

Explain the implication of CA < 0 for a nation's asset holdings

The nation must sell assets to foreigners or borrow from them to finance the expenditure gap.

Net International Investment Position (NIIP)

The value of foreign assets owned by residents minus the value of domestic assets owned by foreigners.

As of July 2025, what was the approximate U.S. Net International Investment Position (NIIP) as a percentage of GDP

-86.3% of GDP.

Approximately how much of the U.S. liability to foreigners is composed of U.S. Treasury bills and bonds

9 trillion dollars.

A country is classified as a 'creditor' when its Net Foreign Assets (NFA) are _____

Positive.

Evolution of Net Foreign Assets (NFA) over time

NFA_t = NFA_{t-1} + CA_t + Asset Revaluations.

Why are 'Asset Revaluations' included in the NFA evolution formula

To account for fluctuations in asset prices and changes in exchange rates.

If a student starts with zero assets, spends 80,000 on tuition via a loan, and has no income, what is their NFA$ at the end of the year

-80,000 dollars.

According to the national saving-investment identity for an open economy, S_P + S_G = _____

I + CA.

Under what condition is a persistent current account deficit considered 'unsustainable' for an economy

When the capital inflow primarily finances government debt and consumption rather than productive investment.

What determines if a large Current Account deficit is 'bad' for an economy

It depends on whether the funds are used for productive investments or for consumption/wasteful activities.

Why might a Current Account deficit financed by equity be less worrying than one financed by debt

Debt requires fixed interest payments that can lead to payment difficulties and crises if investment fails.

In a 'small, open economy' model, what is the key assumption regarding the real interest rate

The economy takes the world real interest rate (r_w) as given and cannot influence it.

Equilibrium condition in a small, open economy

S^d(r_w) = I^d(r_w) + CA(r_w).

In a small open economy where r_w = 5%, S^d = 800, and I^d = 1200, what is the Current Account balance

-400.

If a small open economy has a CA = -400, what is the value of its Capital Financial Account (KFA)

400.

When desired national saving exceeds domestic investment in a small open economy, the country runs a Current Account _____

Surplus.

How does a shift to the left in domestic investment demand (I^d) affect the Current Account of a small open economy

It moves the Current Account toward a surplus (or reduces the deficit).

In a model with two 'large, open economies', how is the world real interest rate determined

It is determined endogenously where the sum of the Current Accounts equals zero (CA_H + CA_F = 0).

Current Account balance in terms of saving and investment

CA = S^d - I^d.

If CA_H = -1400 + 20,000r and CA_F = -600 + 20,000r, what is the equilibrium world real interest rate

0.05 (or 5%).

In a two-country model, if the Home country has a Current Account deficit of 400, what is the Foreign country's Current Account balance

+400.

How does an event that shifts the Home country's I^d curve to the left affect the world real interest rate

It causes the world real interest rate to decrease.

In a large open economy, why does a decrease in Home investment demand lead to a decrease in the Foreign Current Account surplus

The resulting lower world interest rate reduces Foreign saving and increases Foreign investment demand.

What is the two-step heuristic for analyzing shocks in a large, open economy

1) Analyze interest rate change as if closed; 2) Analyze CA change as if small open given that interest rate change.

Which three factors primarily determine the dynamics of the NFA-to-GDP ratio over time

The real interest rate (i - pi), the real GDP growth rate (g), and the Current Account ratio (CA/Y).

How does a high real interest rate relative to GDP growth affect a nation's debt accumulation

It causes debt to accumulate faster as interest payments outpace economic expansion.

What effect does high real GDP growth have on the ratio of net foreign assets to GDP

It lowers the ratio (reduces the relative burden of debt).

Change in NFA/Y ratio (approximate)

Delta(NFA/Y) is approximately (i_t - pi_t - g_t)(NFA_{t-1}/Y_{t-1}) + CA_t/Y_t.

Why is the Current Account balance considered a 'flow' variable in relation to NFA

Because it represents the change in the 'stock' of net foreign assets over a specific period.

In the Balance of Payments, if Goldman Sachs produces investment services in Tokyo, how is the income recorded for the U.S.

As a positive entry in the Current Account.

Which U.S. account tracks the purchase of foreign equities by U.S. residents

The Financial Account (as an outflow).

What is the relationship between domestic saving, domestic investment, and the current account

S^d - I^d = CA.

If a country has S^d < I^d, it must be a net _____ from the rest of the world

Borrower.

In a small open economy, if the world interest rate r_w increases, what happens to the Current Account balance

The Current Account balance increases (moves toward surplus).

What is 'Foreign Direct Investment' (FDI)

Investment made by a company or individual in one country into business interests located in another country.