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International Macroeconomics, 4th Edition | Macmillan Learning for Instructors
Feenstra has been teaching international trade at the undergraduate and graduate levels at UC Davis since , where he holds the C. Bryan Cameron Distinguished Chair in International Economics. Feenstra is a research associate of the National Bureau of Economic Research, where he directs the International Trade and Investment research program. Robert Feenstra Alan Taylor International blogger.com DOWNLOAD HERE ROBERT.. International Economics (4th Edition). Author(s). Rob Feenstra, Alan Taylor. Publisher: Worth. Downloads: Flyer. Further Actions.. PDF | On Jan 1, , Kimberly Clausing published Economics of International Download full-text PDF. opportunity cost. No-trade price of televisions in Foreign is 1/2, lower than the world price of 1. So Foreign will specialize in televisions, export televisions, but import cars.
International macroeconomics feenstra pdf download
At the beginning of the chapter there is a brief quotation from David Ricardo; here is a longer version of what Ricardo wrote: England may be so circumstanced, that to produce the cloth may require the labour of men for one year; and if she attempted to make the wine, it might require the labour of men for the same time.
To produce the wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time.
It would therefore be advantageous for her to export wine in exchange for cloth. This exchange might even take place, notwithstanding that the commodity imported by Portugal could be produced there with less labour than in England. Suppose that the amount of labor he describes can produce 1, yards of cloth or 1, bottles of wine in either country.
Then answer the following: a. Which country has absolute advantage in cloth and in wine, and why? So Portugal has an absolute advantage in both cloth international macroeconomics feenstra pdf download wine, because it has higher marginal products of labor in both industries than does England.
Which country has comparative advantage in wine, and why? So the opportunity cost of wine in terms of cloth is 1. The no-trade relative price of wine is lower in Portugal, so Portugal has comparative advantage in wine, and England has comparative advantage in cloth.
Suppose that each worker in the Home country can produce three cars or two TVs. Assume that Home has four workers. Graph the production possibilities frontier for the Home country. Answer: See the following figure.
What is the no-trade relative price of cars at Home? It is the slope of the PPF curve for Home. Suppose that each worker in the Foreign country can produce two cars or three TVs.
Assume that Foreign also has four workers. Graph the production possibilities frontier for the Foreign country. Answer: See following figure. TV, Q TV units. What is the no-trade relative price of cars in Foreign? Using the information provided in Problem 2 regarding Home, in which good does Foreign have a comparative advantage and why? Answer: Foreign has international macroeconomics feenstra pdf download comparative advantage in producing televisions because it has a lower opportunity cost than Home in the production of televisions.
Add the indifference curve for each country to the figures in Problems 2 and 3. Label the production possibilities frontier PPFindifference curve U1and the no-trade equilibrium consumption and production for each country. Answer: See following figures. In what good will each country specialize? Briefly explain why. Answer: Home would specialize in cars, export cars, and import televisions, whereas the Foreign country would specialize in televisions, export televisions, and import cars.
The reason is because Home international macroeconomics feenstra pdf download a comparative advantage in. So Home will export cars and earn a profit, international macroeconomics feenstra pdf download.
So Foreign will specialize in TV. Graph the new world price line for each country in the figures in Problem 4 and add a new indifference curve U2 for each country in the trade equilibrium. Answer: See the following figures. TV, QTV units. Label the exports and imports for each country. How does the amount of Home exports compare with Foreign imports? Answer: See graph in part b. The amount of Home car exports is equal to the amount of Foreign car imports. In addition, Home imports of televisions international macroeconomics feenstra pdf download Foreign exports of televisions.
This is balanced trade, which is an essential feature of the Ricardian model. Does each country gain from trade? Briefly explain why or why not. Answer: Both Home and Foreign benefit from trade relative to their no-trade consumption because they are able to consume at higher indifference curves.
Answer the following question using the information given by the accompanying table. Home Country. Which country has an absolute advantage in the production of bicycles? Which country has an absolute advantage in the production of snowboards? Answer: Home has an absolute advantage in the production of bicycles because it is able to produce more bicycles in an hour than Foreign. What is the international macroeconomics feenstra pdf download cost of bicycles in terms of snowboards at Home?
What is international macroeconomics feenstra pdf download opportunity cost of bicycles in terms of snowboards in Foreign? Answer: Foreign has an absolute advantage in the production of snowboards because it is able to produce more snowboards in an hour than Home.
Which product will Home export, and which product does Foreign export? Home B. What is the marginal product of labor for TVs and cars in the Home country?
What is the no-trade relative price of TVs at Home? What is the marginal product of labor for TVs and cars in the Foreign country? What is the no-trade relative price of TVs in Foreign? Which good will each country export? Answer: Home will export cars and Foreign will export televisions because Home has a comparative international macroeconomics feenstra pdf download in cars whereas Foreign has a comparative advantage in televisions.
Each country will specialize in the goods with lower. So Foreign will specialize in televisions, export televisions, but import cars. So Home will specialize in cars, export cars, and import televisions. In the trade equilibrium, what is the real wage at Home in terms of cars and in terms of TVs? How do these values compare with the real wage in terms of either good in the no-trade equilibrium?
Answer: Workers at Home are paid in terms of cars because Home exports cars. Home is better off with trade because its real wage in terms of televisions has increased. MPLC 5 1? Answer: Foreign workers are paid in terms of televisions because Foreign exports televisions. Foreign gains in terms of cars with trade, international macroeconomics feenstra pdf download.
In the trade equilibrium, do Foreign workers earn more or less than those at Home, measured in terms of their ability to purchase goods? Explain why. Answer: At the trade equilibrium, real wages for Foreign workers are either 2 cars or 2 televisions, whereas real wages for Home workers are either 3 televisions or 3 cars. Foreign workers earn less than workers at Home in terms of cars because Home has an absolute advantage in the production of cars.
Home workers also earn more than Foreign workers in terms of televisions. Under the Ricaridan model, wage differences are determined by absolute advantage or MPL productivity. Why do some low-wage countries, such as China, pose a threat to manufacturers in industrial countries, such as the United States, whereas other low-wage countries, such as Haiti, do not? Answer: To engage in international trade, international macroeconomics feenstra pdf download, a country must have a minimal threshold of productivity.
Countries such as China have the productivity necessary to compete successfully, but Haiti does not. China can enter the world market because it beats other industrial countries with a lower price. So the lower price in China comes from both a low wage rate and.
Haiti has a low wage rate, but also low MPL, international macroeconomics feenstra pdf download. Answer Problems 9 through 11 using the international macroeconomics feenstra pdf download information for Home and Foreign. Suppose that the number of workers doubles in Home, international macroeconomics feenstra pdf download.
What happens to the Home PPF and what happens to the no-trade relative price of wheat? Cloth, QC yards. Answer: With the doubling of the number of workers in Home, it can now produce 5 4?
The PPF shifts out for both wheat and cloth. Suppose that there is technological progress in the wheat industry such that Home can produce more wheat with the same amount of labor.
What happens to the Home PPF, and what happens to the relative price of wheat? Describe what would happen if a similar change occurred in industry. If instead Home produces only wheat, it is able to produce more wheat using the same amount of labor.
With the technological progress in wheat, international macroeconomics feenstra pdf download, the marginal product of labor in the wheat production increases.
Thus, the relative price of wheat decreases. If instead, international macroeconomics feenstra pdf download, the technological progress is in the cloth industry, we would have the opposite results. In this case, Foreign would switch to exporting wheat instead of exporting cloth. The world price line now moves inside the PPF, which will lower the welfare than no trade case.
International Macroeconomics CH7– IS-LM-FX Model and Macroeconomic Policies, Feenstra (Part 2)
, time: 18:33International macroeconomics feenstra pdf download
Feenstra has been teaching international trade at the undergraduate and graduate levels at UC Davis since , where he holds the C. Bryan Cameron Distinguished Chair in International Economics. Feenstra is a research associate of the National Bureau of Economic Research, where he directs the International Trade and Investment research program. opportunity cost. No-trade price of televisions in Foreign is 1/2, lower than the world price of 1. So Foreign will specialize in televisions, export televisions, but import cars. D) all countries lose from international trade. According to the Ricardian principle of comparative advantage, international trade increases a nation's total output because: A) the nation's resources are used where they are most productive. B) the output of the nation's trading partner declines.
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