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Q. Explain why large interest rate differences would be strong evidence of unrealized gains from trade.
Answer: The difference between offshore and onshore interest rates on similar assets denominated in the same currency should be small if information about global investment opportunities is transmitted resourcefully. Data demonstrate that this is the case for the Germany, Japan, United States and the Netherlands.
Q. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it could choose to produce at which point in the diagram above? Sup
Q. One of the usually used assumptions in deriving the Heckscher-Ohlin model is that tastes are homothetic, or that if the per capita incomes were the similar in two countries, th
Q. Using an equation, explain why governments prefer to avoid excessive current account surpluses. Answer: This pursue from the national income identity S = CA + I which says
explained with example
What will be the effects of an increase in real national income on the interest rate? Answer: An enhance in real national income will increase the interest rate. If investment
Q. Explain why the European Union's current combination of rapid capital migration with limited labor migration may actually raise the cost of adjusting to product market shocks wi
2. If a country's growth is biased in favor of its import, this should unequivocally improve its terms of trade and its economic welfare. Discuss. Answer: Suppose the Japan
Q . While selling exports it could also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel could the firm sell
discuss the possibility of trade if factor endowment are identical and tasde is different
Q. Why do we observe the Leontief paradox? Answer: There are several possible answers that they may be categorized into three groups. One would argue that the theory or model
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