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Question: Suppose when Russia opens to trade, it imports automobiles, a capital-intensive good.
a. According to the Heckscher-Ohlin theorem, is Russia capital-abundant or laborabundant? Briefly explain.
b. What is the impact of opening trade on the real wage in Russia?
c. What is the impact of opening trade on the real rental on capital?
d. Which group (capital owner or labor) would support policies to limit free trade? Briefly explain.
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Describe the present economic crisis situation in Europe. Why has it been so difficult for the Europeans to find a solution to this problem? Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..
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Problem based on Utility Function - Problem, Answer and explain the following using a diagram which is completely labeled.
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Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.
How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.
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