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In the Dornbusch-Fischer-Samuelson model, both countries (a and b) are assumed to have identical demand patterns. Suppose that tastes shift so that consumers everywhere now

In the Dornbusch-Fischer-Samuelson model, both countries (a and b) are assumed to have

identical demand patterns. Suppose that tastes shift so that consumers everywhere now want

to buy relatively more of the goods from that range of goods in which country a has a

comparative advantage. Explain what happens to the ratio of wages in the two countries and to

the range of goods produced in the two countries. What is the role of the assumption of full

employment in this?

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