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Q. Use the diagram below taken from Figure 4-4 to identify the pre-trade situation for Australia and Sri-Lanka. Where on the K/L axis will you search each of the two countries? Which of the two countries has a higher relative wage, w/r? Which product is the labor intensive, and which is the land intensive one? Show where the relative price of cloth to food will be taken once trade opens between these two countries. Show where the relative wages of each will semms. Answer: You will search Sri-Lanka to the left of Australia on the K/L axis. Australia has a elevated relative wage. Food is the land intensive product and the relative price PC/PF is found among the two autarkic prices. The post trade relative wage is among the two autarkic ones on the vertical axis.
Explanation with critical appraisal
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Q. Explain why in practice the extent to which a measured balance of payments disparity, either a surplus or a deficit, will affect home and foreign money supply is quite uncertain
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Q. What are the reasons for the world as a whole running a substantial current account deficit? Answer: This deficit improved sharply in the early 1980s and has remained high.
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Porter Competitive Forces Model: Effectively dealing with the competitive forces that exist within its industry lead to a successful organization. The organization i
ln?(?FDI?_t )=ln??(C)+? ln?(?CNGDP?_t )+ßln?(?GDP?_t ?)+a ln?(DIST)+fCAFTA+?_(1 ) ln?(?EXPORT?_t )+?_2 ln?(?GDPM?_t )+?_3 ln?(?CPI?_t )+?_4 ln?(?GDPA?_t )+e
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Q. International trade leads to complete equalization of factor prices. Discuss. Answer : This statement is usually "true...but". Under a limited and strict set of assumpti
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