East Asian economies have expanded their proportion of global GDP over the last few decades. Likewise, intra-East Asian trade — that is, trade between East Asian countries – has increased as a share of global trade. Furthermore, East Asian countries are growing their commerce with one another. By using gravity model, explain why.
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East Asian economies have expanded their proportion of global
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- The gravity model is frequently used to explain why two countries do not trade. Give examples and causes for this abnormality.1. Over the past few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade – that is, trade among East Asian nations – has grown as a share of world trade. More than that, East Asian countries do increasing share of their trade with each other. Explain why, using the gravity model.Suppose Congress cuts spending for the military, and then unemployment rises in the Philippine defense industry. Is there causation in this situation, or are we observing an association between events?
- Ireland and Belgium have very similar trading patterns. Both trades considerably more with the United States than with the European Union (EU), even though they are EU members and are closer to the EU common market than the American market. Explain this anomaly using the gravity model.Heckscher-Ohlin Theorem: Suppose Azerbaijan and Georgia produce meat and potatoes. Azerbaijan is capital-abundant than Georgia (Scarce factor in Azerbaijan is land, and in Georgia it is capital). Suppose meat production is relatively more capital-intensive. When the two countries will open up borders and start trading with one another, please indicate in the boxes below, what is likely to happen to the variables after the trade Write + the variable increases; - if the variable decreases; 0 if the variable does not change; A if the direction of change is unknown. VARIABLES AZERBAIJAN GEORGIA The relative price of meat (Pm/Pp) Output of meat Output of potatoes Exports of meat Exports of Potatoes Imports of meat Imports of Potatoes Income of landowners in Azerbaijan Income of capital owners in Georgia WagesExplain, using the concept of the elements of model, the statement-“A model is a theoretical structure representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them.
- The Gravity model predicts that two countries trade more the bigger they are and the closer they are to the equator. True FalseThe Heckscher-Ohlin model predicts that trade in goods leads to convergence in prices of factors between different countries. True FalseThe South African Rand flactuates widly on a daily, weekly, monthly basis. Identify all the variables that would be used in an econometric equation that estimates the relationship between South african economic growth and exchange rates (dollar to rand). appraise each variable that is included in the model using economics theory and briefly discuss the tests used to ensure model is statistically sound.
- Consider the production productivity matrix of two goods from the US and India: United States of America India Labor force 200 800 Labor per unit corn 8 50 Labor per unit automobile 10 40 4. How many units of automobiles will the US produce should it exhaust half of its labor force to produce automobiles? Group of answer choices 20 10 25 Not enough data 5. How many units of automobiles will India produce should it exhaust all its labor force to produce automobiles? Group of answer choices 20 16 25 12Consider an H-O economy in which there are two countries (US and France), two goods (wine and cheese) and two factors (capital and labor). In each question below you are given partial information about the model and asked to infer some other part. Treat each question separately and independently. 1. Suppose a decrease in the price of cheese causes a decrease in the wage rate in the US economy. Which factor is used intensively in cheese production in France? Which H-O theorem is used to get this answer? Explain. 2. Suppose France exports wine, the capital-intensive good. Which factor benefits from free trade in the US? Explain. 3. Suppose workers in France benefit when tariffs are increased on cheese imports. Which factor is used intensively in cheese production? What is France's abundant factor? Explain.Which statement is not true about the use of models in economics? 1. They are based on simplifying assumptions. 2. They are used to forecast economic variaables such as GDP growth. 3. They must closely mirror real life in order to be informative. 4. There are often multiple models that seek to explain the same economic phenomena. 5. They are usually represented graphically