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Im lost on this problem Problem 1: (20 points) Suppose Russia is exporting refined petroleum to Netherlands and importing specific types of medical drugs from

Im lost on this problem

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Problem 1: (20 points) Suppose Russia is exporting refined petroleum to Netherlands and importing specific types of medical drugs from there. a. Use the standard trade model to explain how imposing an export subsidy can affect the relative prices in Russia. Use a relative supply and demand diagram to explain the effects on terms of trade in Russia. (8 points) b. Assume an import-biased growth in Russia. Show the effect of this change on the production possibilities frontier. (4 points) c. How does this import-biased growth can affect the RS-RD model of Russia? Use the terms of trade for Russia as relative prices in your graphing model; does it increase or decrease? (8 points)

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