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Comment on the following statement by using appropriate theoretical models and related diagrams: If two countries are technologically identical, they cannot benefit from trade.

 

Comment on the following statement by using appropriate theoretical models and related diagrams: "If two countries are technologically identical, they cannot benefit from trade." "Following the global financial crisis, we saw that nominal interest rates fell to around zero in many European countries. As a result, such countries were caught in what economists call a "liquidity trap". Explain the main economic policy implications of such a case by using the DD-AA model and discuss potential solutions.

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Statement 1 If two countries are technologically identical they cannot benefit from trade The statement suggests that if two countries have identical technology levels they would not gain any advantag... blur-text-image

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