Question 5 (10 points) The government of the developing country Pesthan used the infant industry argument from 1999 to 2019 to limit imports. To this end, it increased import duties and introduced import quotas. The national currency, the pesto, is a floating convertible. COVID-19 is also striking in Pesthan and is putting pressure on household incomes. In early 2020, the Economic Advisory Body (EAB) is asked by the government to investigate whether reducing barriers to imports could potentially be beneficial for households and businesses. The EAB presents information from Pesthan in Table 1 and from comparable developing countries in Graph 1. 1999 2019 C household consumption 120 140 Igross gross investments by firms 12,5 15 Gerato gross investments by government 56 57 X export value of goods and services 18 22,5 M import value of goods and services 20 25 Table 1: Macroeconomic figures of Pesthan in billion pesto. 5,0 4.5 4.0 3,5 3,0 Avg yearly GDP growth 2.5 2.0. 1.5. 1,0 0,5 .0 4 -2 2 Avg yearly change of trade quota (%) Graph 1: Change in the international trade ratio and GDP in comparable developing countries.1,0 0,5 2 4 6 1,0 Agv yearly change of Gini coefficient 1.5 2.0 2,5 Agv yearly change of trade quota Graph 2: Change in the international trade ratio and Gini coefficient in comparable developing countries. An indicator of the openness of the economy to international trade is the international trade ratio, calculated according to the formula below. In 1999 the figure was 0.20. International trade quota = xgs + mgs GDP Of which: xgs = export value of goods and services mgs = import value of goods and services GDP = gross domestic product Sa. Show by graph that limiting imports allows domestic companies in Pesthan to become more competitive in the world market over time (2 points)- b. Calculate to determine whether Pesthan's international trade ratio has increased or decreased in 2019 compared to 1999 (1 point) C. Explain by using only the information from Table 1, that the increase in the export value in the period 1999-2019 could have been caused by a change in the value of the pesto (2 points). d. Explain that the price level in Pesthan may have increased due to the depreciation of the pesto (2 points). e. Based on the information in charts 1 and 2, the EAB advises to allow more free trade. Explain the EAB's opinion (2 points). f. What is based on the information in charts 1 and 2 the main conclusion of the distribution of income. Explain your answer (1 point)