A recent article in the Time magazine suggested that there were some potential winners, who would be benefited from the sanctions on Russia3 .

a. Countries including Mexico and Turkey, which have not imposed sanctions, could benefit from increased trade, as it could re-export some goods from Russia to other countries. Explain, with an aid of the diagram of AE line, the impact of the sanctions on the output of a non-sanctioning country using the Keynesian model. (8%).

b. Some countries could benefit from highly skilled Russian and Ukrainian workers leaving their homes and migrating to more favorable locations. Based on the classical model, explain, with an aid of the diagram, how the immigration of skilled workers and human capital might affect the long-run output level of these countries. (8%).