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Suppose that Germany decides to become self sufficient in bananas and even to export them. in order to accomplish these goals, large tax incentives are granted to companies that will invest in banana production. Soon, the German industry is competitive and able to sell bananas at the lowest price anywhere. Does Germany have a comparative advantage? Why, or why not? What are the consequences for the overall economy?
If the relative wage w/w* for US decreases to 5 due to productivity changes, which country would now be exporter of books, and why?
Assume that the country A has only three categories of traded goods and that A's imports and exports of the three goods are as follows:
Discuss and critically evaluate this statement with reference to the theory and empirical evidence relating to the "law of one price" and the theory of purchasing power parity (PPP).
Comparative statement information for Douglas Corporation and Maulder Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2009, and December 31, 2008.
Assume that in England five man hours of labor are needed to make each cask of wine and five man-hours are needed to produce each bolt of cloth,
Suppose you are the owner of a small bank in a state that is planning allowing interstate banking. You do not like this because it will be possible for large money center banks in Washington,
How might a government solve the problem of overfishing by assigning property rights over areas of the sea around the local coastline to a single fisherman. Have property right policies been successful in Asia in practice? What are the big issues ..
due to growing U.S. economy, the overall market demand for nails will increase by 2 percent. Based on this information should you plan to increase or decrease your production on nails. the overall market supply of nails will decrease by 2 percent.
The Economist regularly publishes the Big Mac index to examine the validity of purchasing power parity. If purchasing power parity holds, a consumer should be able to take the same amount of money required to buy a Big Mac in the U.S.
ssume under a system of flexible exchange rates a black and white TV rates $150 in the United State and 18,600 yen in Japan. Other things being equal,
Many people say yes that government's role in free market economy should be limited, the degree of appropriate government involvement is contested.
Although the world financial crisis of 2008-2009 began in the U.S. sub-prime mortgage market, it quickly spread around the world. Ironically, foreign assets became viewed as riskier than U.S. assets.
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