6. The Internet has allowed for increased trade in services such as programming and technical support, a
Question:
6. The Internet has allowed for increased trade in services such as programming and technical support, a development that has lowered the prices of such services relative to those of manufactured goods. India in particular has been recently viewed as an “exporter” of technology-based services, an area in which the United States had been a major exporter. Using manufacturing and services as tradable goods, create a standard trade model for the U.S. and Indian economies that shows how relative price declines in exportable services that lead to the “outsourcing” of services can reduce welfare in the United States and increase welfare in India.
Step by Step Answer:
International Finance Theory And Policy
ISBN: 9781292019550
10th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz