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Suppose, as a result of various dynamic factors associated with exposure to international competition, Tennesiana's economy grew, and is now represented by the rightmost production
Suppose, as a result of various dynamic factors associated with exposure to international competition, Tennesiana's economy grew, and is now represented by the rightmost production possibility frontier in the figure 1. If its point of production with trade was point c, would you consider this growth to be export-biased or import biased? If Tennesiana were a large country with respect to the world trade of A and B, how would this growth affect Tennesiana's terms of trade and its real income?
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