Growth affect in terms of trade, International Economics

Assignment Help:

Q. Suppose Albania is exporting product B, and experienced economic growth biased in favor of product B as seen in the Figure above. We are also told that Albania's new consumption point is at point d. Would you still consider the economic growth, which took place biased in favor of B? If Albania were a large country how would this growth affect its terms of trade?

Answer: This is a comparatively difficult case. On the other hand the growth is still theoretically export biased. Though, Albania's expenditure clearly shifted in favour of its import product A. In this case the worsening in the terms of trade would be a lot more pronounced than before and may lead to a case of immiserizing growth. Though, for this to take place there should have been a major shift in the taste patterns the old community indifference map is not longer applicable. Consequently when we attempt to judge the direction and magnitude of the welfare change we are evaluate the old versus new taste preferences which raise the classic index number problem.


Related Discussions:- Growth affect in terms of trade

Differences in social support networks and satisfaction, A vast body of lit...

A vast body of literature has been dedicated to the study of social support and satisfaction.  Social support is commonly viewed as one of the most important concepts of close pers

Who is liable for discrimination?, een subject to a discrimination complain...

een subject to a discrimination complaint as a result of their recent recruitment campaign- They told the recruitment agency that they were looking for ‘young women with flair'' to

International trade in assets make both countries better off, Q. Ho...

Q. How can international trade in assets make both countries better off? Answer: By permitting them to reduce the riskiness of the return on their wealth and by allowin

Income distribution, argument about fair distribution of income and gnp as ...

argument about fair distribution of income and gnp as a measurment of economic growth

International monetary system influence macroeconomic policy, Q. How did th...

Q. How did the international monetary system influence macroeconomic policy-making and performance during the interwar period (1918 - 1939)? Answer: Governments efficiently sus

Classical theory, What are disadvantages the classical theory of internatio...

What are disadvantages the classical theory of international trade

Classical theory and neo classical theory, difference between classical an...

difference between classical and neo classical theory of international trade.

Show empirical support for the existence of paradox, Q. The Metzler Parado...

Q. The Metzler Paradox is a special case of the optimum tariff idea. Discuss this assertion. Could the optimum tariff tend to be a high one or a low one in the case where this p

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd