Standard trade model with two large countries home-foreign

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Reference no: EM131425933

Assume a standard trade model with two large countries Home and Foreign, two goods X and Y and two factors of production Labour (L) and Capital (K). Show graphically and verbally how

a) an international income transfer from Home to Foreign

b) a so-called export biased growth in Home

Affect the structure of trade (exports and imports), production and consumption as well as the terms of trade of both countries.

Reference no: EM131425933

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