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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 pattern of trade is usually observed to conform to the Heckscher-Ohlin models expectations. Namely the developing countries are likely to export labour-intensive goods such as textiles and import capital-intensive goods such as machinery. The volume though is quite lower than what would be expected from the neoclassical model. There are several possible reasons such as financial crises necessitating premier in the financing of this trade.
Q. Analyze the effects of devaluation on an economy. Answer: Devaluation basis a rise in output a rise in official reserves and an expansion of the money supply. A private cap
theory of opportunity cost?
The Source of Comparative Advantage can be understood as follows: The source of comparative advantage could be productivity differential (Ricardo) or differences in the factor
Q. Consider the economy is initially consuming along the intertemporal budget constraint at point A, where no saving occurs. How does a fall in the real interest rate, r, and affe
Q. Why is the H.O. model called the factor-proportion theory? Answer: The H.O. model survey the limitations and the nature of presumptuous that the sole determinant of compar
Question: (a) Illustrate the differences between inter and intra industry trade. (b) Foreign Investors generally tend to adopt a two-stage process when evaluating count
Q. What is securitization? Answer: The term refers to monetary instruments in which bank assets are repackaged in readily marketable forms These kinds of "derivatives"
Q. The two deadweight triangles are the Production distortion and Consumption distortion losses. It is simple to understand why the Consumption distortion constitutes a loss for
review the general equilibrium conditions under autarky and given free trade using the opportunity cost theory of trade
Q. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? Answer: $5/ton.
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