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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.
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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What is the role of foreign trade in an economic development of a country
Habrrler''s oppirtunity cost theory
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Countries are indulged in trade because there are mutual gains from trade. But then, what are these gains which they obtain, and how are these realized? Comparative advantage theor
Q. Explain how the money markets of two countries are linked through the foreign exchange market. Answer: The financial policy actions by the Fed affect the U.S. interest rate
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