By using the concept of the Standard Trade Model, and the assumptions of the H-O model. a) Explain with a graph why with the increase in the relative price of Cloth PC/PF then should domestic export Cloth? b) If a country exports Cloth and imports Food, then there is biased growth on cloth, how will it affect the terms of trade? Explain. c) With the same assumptions in number b), what is the impact of export- biased growth and import biased growth of domestic countries on welfare domestic? Explain

By using the concept of the Standard Trade Model, and the assumptions of the H-O model. a) Explain with a graph why with the increase in the relative price of Cloth PC/PF then should domestic export Cloth? b) If a country exports Cloth and imports Food, then there is biased growth on cloth, how will it affect the terms of trade? Explain. c) With the same assumptions in number b), what is the impact of export- biased growth and import biased growth of domestic countries on welfare domestic? Explain

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter4: The Aggregate Economy

Section: Chapter Questions

Problem 4E

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