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Q. What are the three types of gains from international transactions between the residents of different countries?
Answer:
1. Gains due to comparative benefit and economies of scale.
2. Gains because of inter-temporal trade which is the exchange of goods and services for claims to future goods and services which is for assets.
3. Gains because of trades of assets for assets such as the exchange of real estate located in London for U.S Treasury bonds.
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part of the return on the investment comes from the asset itself and part from the currency of the foreign currency. agree or disagree?
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