International trade, Macroeconomics

Suppose home cost pricing prevails in international trade, while world output is declining. Consider two economies, A and B, both having floating exchange rates and the same monetary policy regime; the only difference being that the wage costs of economy A increase relative to those of economy B. How can the Mundell-Fleming model be used to explain what happens to the trade balance and output of these two economies.

Posted Date: 4/2/2013 6:32:46 AM | Location : United States







Related Discussions:- International trade, Assignment Help, Ask Question on International trade, Get Answer, Expert's Help, International trade Discussions

Write discussion on International trade
Your posts are moderated
Related Questions
Identify a generic organization (e.g., manufacturing plant, hospital, educational institution). You will use this same organization in your Final Project. Assume that you are part


How can a country maintain equilibrium GDP with foreign trade?

Using a short-run Phillips Curve, illustrate the change in inflation and unemployment resulting from the increase in profit expectations.

Assume a sudden collapse in the stock exchange of an economy is expected to reduce the future profitability of the firms of the economy. Construct loanable funds market in a c

How can we answer in Economic terms this questions: Why should the government consider to increase tax on cigarette

In real life, the operation of simple multiplier is affected by many leakages. Leakages in the multiplier arise out of the following reasons: (1) Saving:  If all the income is sp

TRADE AND DEVELOPMENT: In the earlier Units of this block, you have learnt about the trade policy from historical perspective and the recent shift in policy during nineties. Y

Suppose that a public park is visited by people living in five concentric zones around the park. Each zone has a population of 5000, and the total travel cost for a visit to the pa

Explain why a perfectly competitive firm does not expand its sales without limit if its horizontal demand curve indicates that it can sell as much as desires at the current market