2. (a) What does the index of intra-industry trade measure and doesit tell us anything about the total amount of trade?(b) There are two ways of measuring the degree of intra-industry tradewithin an industry:min (imports, exports)Index of intraindustry trade =12 (imports + exports)-(lexpe(lexports - imports|exports + importsGrubel Lloyd index = 1 -Using the first formula, calculate the index of intra-industry trade forthe U.S in 2014 for the products on Table 1.Using your answer in (b) above, what does the index of intra-industry trade of men's shorts, large passenger aircraft, telephonesand golf carts tell us?(d) What are the two necessary conditions to obtain a highindex of intra-industry trade?

DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…

2. (a) What does the index of intra-industry trade measure and does it tell us anything about the total amount of trade? (b) There are two ways of measuring the degree of intra-industry trade within an industry: Index of intraindustry trade = min (imports, exports)

2. (a) What does the index of intra-industry trade measure and does it tell us anything about the total amount of trade? (b) There are two ways of measuring the degree of intra-industry trade within an industry: Index of intraindustry trade = min (imports, exports)

Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781305971509

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 10PA

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Question

2. (a) What does the index of intra-industry trade measure and does
it tell us anything about the total amount of trade?
(b) There are two ways of measuring the degree of intra-industry trade
within an industry:
min (imports, exports)
Index of intraindustry trade =
1
2 (imports + exports)
-(lexpe
(lexports - imports|
exports + imports
Grubel Lloyd index = 1 -
Using the first formula, calculate the index of intra-industry trade for
the U.S in 2014 for the products on Table 1.
Using your answer in (b) above, what does the index of intra-
industry trade of men's shorts, large passenger aircraft, telephones
and golf carts tell us?
(d) What are the two necessary conditions to obtain a high
index of intra-industry trade?

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