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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. Discusses the effects of a rise in the interest rate paid by euro deposits on the exchanger rate. Answer: For a known U.S. interest rate and a given expectation wi
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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.
Q. Why do you suppose that South-South trade does not conform in volume, but does conform in pattern with expectations prepared by the Heckscher-Ohlin model? Answer: The patt
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