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Countries are indulged in trade because there are mutual gains from trade. But then, what are these gains which they obtain, and how are these realized? Comparative advantage theory provides the answers to such questions. The theory says that countries will gain by specializing in it and then exporting the good they have a comparative advantage or lower opportunity of the cost advantage in.
Explain why the exchange rate model based on PPP is a long-run theory. Answer: PPP theory is a financial approach to the exchange rate. It is a long-run theory for the reason
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