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Q. Now, consider that the relative price of A is actually not higher than Albania's autarkic level of 1, but quite the opposite (e.g. PA/PB = 0.5). Could Albania still be able to gain from trade? If so, where could be its production point? Given the information in this question, where is Albania's comparative advantage?
Answer: Yes as long as the world's terms of trade differed from those of Albania that country stands to increase from international trade. In this particular case its aim of production with trade would be at point c.
International Relations (IR) Goal : The goal of this writing assignment is for you to hone your skills in identifying accuracy or bias in movies or in "alternative" documentar
Using examples, from the government, illustrate the significant opportunity cost.
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Application of defferential calculus in economics
If one were to use the simple monetary model to predict the $/Euro exchange rate (L is constant), what would the expected exchange rate be?
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Q. Explain Purchasing Power Parity. Answer: PPP () states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels.
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Q. Explain the purpose of the given figure? Answer: To demonstrate that spot and forward exchange rates are in general close to each other.
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