Q: In the discussion of empirical results on the Heckscher-Ohlin model
In the discussion of empirical results on the Heckscher-Ohlin model, we noted that recent work suggests that the efficiency of factors of production seems to differ internationally. Explain how this w...
See AnswerQ: Suppose Country X subsidizes its exports and Country Y imposes a “
Suppose Country X subsidizes its exports and Country Y imposes a “countervailing” tariff that offsets the subsidy’s effect, so that in the end, relative prices in Country Y are unchanged. What happens...
See AnswerQ: Equation (2.1) says that trade between any two
Equation (2.1) says that trade between any two countries is proportional to the product of their GDPs. Does this mean that if the GDP of every country in the world doubled, world trade would quadruple...
See AnswerQ: Explain the analogy between international borrowing and lending and ordinary international trade
Explain the analogy between international borrowing and lending and ordinary international trade.
See AnswerQ: Which of the following countries would you expect to have intertemporal production
Which of the following countries would you expect to have intertemporal production possibilities biased toward current consumption goods, and which biased toward future consumption goods? a. A country...
See AnswerQ: In the trade scenario in problem 1, due to overfishing,
In the trade scenario in problem 1, due to overfishing, Norway becomes unable to catch the quantity of fish that it could in previous years. This change causes both a reduction in the potential quanti...
See AnswerQ: In some economies relative supply may be unresponsive to changes in prices
In some economies relative supply may be unresponsive to changes in prices. For example, if factors of production were completely immobile between sectors, the production possibility frontier would be...
See AnswerQ: The counterpart to immobile factors on the supply side would be lack
The counterpart to immobile factors on the supply side would be lack of substitution on the demand side. Imagine an economy where consumers always buy goods in rigid proportions—for example, one yard...
See AnswerQ: Japan primarily exports manufactured goods, while importing raw materials such as
Japan primarily exports manufactured goods, while importing raw materials such as food and oil. Analyze the impact on Japan’s terms of trade of the following events: a. A war in the Middle East disrup...
See AnswerQ: Countries A and B have two factors of production, capital and
Countries A and B have two factors of production, capital and labor, with which they produce two goods, X and Y. Technology is the same in the two countries. X is capital-intensive; A is capital-abund...
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