Help me answer question number 10 only (International Economic)

to affect the welfare of economy identical to that of China to the world economy.) 8 d new 10. In practice much foreign aid is "tied"; that is, it comes with restrictions that require that the recipient spend the aid on goods from the donor country. For example, France might provide money for an irrigation project in Africa, on the condition that the pumps, pipelines, and construction equipment be purchased from France rather than from Japan. How does such tying of aid affect the transfer problem analysis? Does tying of aid make sense from the donor's point of view? Can you think of a scenario in which tied aid actually makes the recipient worse off? 1. Suppose that one country subsidizes its exports and the other country imposes a "countervailing" tariff that offsets its effect, so that in the end relative prices in the sec- ond country are unchanged. What happens to the terms of trade? What about welfare in the two countries? Suppose, on the other hand, that the second country retaliates with an export sub- sidy of its own. Contrast the result