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Question 4 (16 points) Consider the risk diversification we studied in class. Two countries are identical except that their outputs move in opposite directions. Each

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Question 4 (16 points) Consider the risk diversification we studied in class. Two countries are identical except that their outputs move in opposite directions. Each country owns 100% of the domestic labor. Fill in the following tables. (a) (5 points) Each country owns 100% of the domestic capital. Country A Capital Income Labor Income IGNI GDP State 1 50 80 State 2 30 70 Country B Capital Income Labor Income GNI GDP State 1 30 70 State 2 50 80 World Capital Income | Labor Income GNI GDP State 1 State 2 (b) (8 points) Each country owns 70% of the domestic capital and 30% of the foreign capital. Country A Capital Income Labor Income | GNI GDP State 1 State 2 Country B Capital Income | Labor Income GNI GDP State 1 State 2 World Capital Income | Labor Income GNI GDP State 1 State 2 (c) (3 points) Comment on the gains from diversification, if there are any in this case

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