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Suppose a capital abundant country (such as SWITZERLAND) is entering a free trade agreement with a resource rich country such as Norway. Explain the pattern
- Suppose a capital abundant country (such as SWITZERLAND) is entering a free trade agreement with a resource rich country such as Norway.
- Explain the pattern of trade as predicted by Heckscher Ohlin Theorem between Switzerland and its trade partner. (You do not need a diagram to answer this question).
- Explain what happens to the price of exports and imports in each country as trade opens.
- Discuss what happens to the real wages and the real return to capital in each country.
- Does the concept of "magnification effect" apply to your answer in part (c)? Why?
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The Economic Consequences Of The Peace
Authors: John Maynard Keynes
1st Edition
1420905856, 9781420905854
