Question
Home exports Cloth, Foreign exports Food. Cloth uses Labour intensively, Food uses Capital intensively. (a) Home experiences growth in the size of its labour force.
Home exports Cloth, Foreign exports Food. Cloth uses Labour intensively, Food uses Capital intensively. (a) Home experiences growth in the size of its labour force. Show the change to the Home country's PPF. (b) Use a graph to show shifts or changes to Home's RS and RD for Cloth. (c) Use a graph to show shifts or changes to World RS and RD for Cloth. What is the impact on the Home country's Terms of Trade? (d) If Foreign puts in place an import tariff use a figure showing Home's PPF to show changes to production and consumption in the Home country
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