Home Foreign 100 L 25 MPL Wheat 3 2 Cloth 4 1 Assume no-trade in problems a-h a. What is the relative price of wheat (PWP<) in the home country? In the foreign country? b. What is the real wage in terms of wheat in the home country? In terms of cloth in the home country? c. What is the real wage in terms of wheat in the foreign country? In terms of cloth in the foreign country? d. Suppose the price of wheat is $5. What is the value of the nominal wage (W) in the home country?
Home Foreign 100 L 25 MPL Wheat 3 2 Cloth 4 1 Assume no-trade in problems a-h a. What is the relative price of wheat (PWP<) in the home country? In the foreign country? b. What is the real wage in terms of wheat in the home country? In terms of cloth in the home country? c. What is the real wage in terms of wheat in the foreign country? In terms of cloth in the foreign country? d. Suppose the price of wheat is $5. What is the value of the nominal wage (W) in the home country?
Chapter4: The Aggregate Economy
Section: Chapter Questions
Problem 4E
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