If a large nation experiences growth of its abundant input, other things held constant, one would expect that in the post-growth trade equilibrium, a. Its welfare increases not only because of outward shift in the PPF but also because of the more favourable terms of trade. b. Its welfare decreases because of the adverse effects on its terms of trade as well as due to the excess supply of its export good. c. Its welfare increases because of the growth of the input but decreases because of the adverse terms of trade, with the overall effect being uncertain. d. Its welfare will increase.
If a large nation experiences growth of its abundant input, other things held constant, one would expect that in the post-growth trade equilibrium, a. Its welfare increases not only because of outward shift in the PPF but also because of the more favourable terms of trade. b. Its welfare decreases because of the adverse effects on its terms of trade as well as due to the excess supply of its export good. c. Its welfare increases because of the growth of the input but decreases because of the adverse terms of trade, with the overall effect being uncertain. d. Its welfare will increase.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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If a large nation experiences growth of its abundant input, other things held
constant, one would expect that in the post-growth trade equilibrium,
a. Its welfare increases not only because of outward shift in the
also because of the more favourable terms of trade.
b. Its welfare decreases because of the adverse effects on its terms of
trade as well as due to the
c. Its welfare increases because of the growth of the input but decreases
because of the adverse terms of trade, with the overall effect being
uncertain.
d. Its welfare will increase.
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