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Assume two countries: Home and Foreign with two factors of production: capital and labour, producing two goods: tablets and cloth. Technology is the same in

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Assume two countries: Home and Foreign with two factors of production: capital and labour, producing two goods: tablets and cloth. Technology is the same in both countries. Tablets are capital intensive, cloth is labour intensive. Explain what happens with the terms of trade and the welfare in each country in the following situations: a) An increase in Home's capital stock. b) An increase in Foreign's labour supply

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