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Q. "No country is abundant in everything." Discuss.
Answer: the idea of relative (country) factor abundance is (like factor intensities) a relative concept. When we recognize a country as being capital intensive, we signify that it has more capital per worker than does the other country. If one country has supplementary capital worker than another, it is an arithmetic impossibility that it also has more workers per unit capital.
Describe and explain the relationship between expected inflation rates in two countries and their interest rate differential according to the PPP theory. Answer: Expected pric
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Q. What are the three types of transactions between the residents of different countries? Answer: 1. Trades of services and goods for goods or services. 2
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