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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.
Q. Other things being equal, a rise in a country's terms of trade enhances its welfare. What could happen if we relax the ceteris paribus assumption, and allow for the law of dema
Q. What is the interest parity condition? Answer: The circumstance that the expected returns on deposits of any two currencies are equal when measured in the same currency is
report writing for 1500 words
tion..What is the range of gross barter terms of trade ?
Q. Explain why East Asian countries have done so well relative to South American countries. Answer: Generally the reasons are less moral hazard less government debt to forei
Q. Explain Purchasing Power Parity. Answer: PPP () states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels.
Q. Explain the purpose of the given figure? Answer: To demonstrate that spot and forward exchange rates are in general close to each other.
is general equilibrum in trade
Q. Consider, as a result of several dynamic factors associated with exposure to international competition, Albania's economy grew, and is now shown by the rightmost production pos
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