Peter Pundit, an economics reporter, states that the European Union (EU) is increasing its productivity very rapidly in all industries. He claims that this productivity advance is so rapid that output from the EU in these industries will soon exceed that of the United States and, as a result, the United States will no longer benefit from trade with the EU.a. Do you think Peter Pundit is correct or not? If not, what do you think is the source of his mistake?b. If the EU and the United States continue to trade, what do you think will characterize the goods that the EU sells to the United States and the goods that the United States sells to the EU?

Key Concepts: Productivity, Trade, European Union, United States, Comparative Advantage Explanation: The question discusses the claim made by Peter Pundit about the productivity of the European Union in all industries, and its effects on the trade between the EU and the United States. Step by Step Solution: Step 1. Analyse the claim made by Peter Pundit regarding the productivity of the European Union Step 2. Evaluate the validity of the claim Step 3. Discuss the potential impact of increased productivity in the EU on trade between EU and the United States Step 4. Consider the potential differences in goods sold by EU and the US Final Answer: It is unclear whether Peter Pundit's claim about the EU's productivity is correct or not. Even if the EU's productivity does increase rapidly, it doesn't necessarily mean that the US won't benefit from trading with the EU. Comparative advantage suggests that both countries can benefit from specialization and trade, regardless of absolute levels of productivity. If EU and the US continue to trade, it is likely that the EU will export goods that it can produce more efficiently than the US and vice versa. This is because comparative advantage suggests that countries should specialize in the production of goods they're relatively more efficient in producing and import goods that they're relatively less efficient in producing.