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- relationship of Globalization and the Mcdonaldization modelIn the model of the poverty trap used by Sachs (also known as the Lewis model), Y=min(AK,BL). (where Y is GDP, K is capital stock, L is labor, and A and B are model parameters). Using this model, give an algebraic expression for the minimum amount of aid necessary to exit a poverty trap for a country. The necessary aid should be as a ratio to the recipient’s GDP. Show how this amount depends on the depreciation rate for the capital stock, the population growth rate for the country, the rate of return to capital (A), and the recipient country’s saving rate. Now calculate the required amount of aid if the depreciation rate = .05, the population growth rate =.02, A=0.2, B=0.4, and the saving rate = 0.15. Explain why the country would remain in poverty without this amount of aid. Discuss what assumptions on surplus labor and aid effects are necessary for the model to be correct on how aid is both necessary and sufficient to end the poverty trap. Discuss what the model says about…Explain Gerschenkron’s theory of backwardness in detail
- . Ricardian Model. Consider two countries: A and B. Labour is the only factor of production for goods X and Y. Consider the following matrix of unit labour requirements. X Y Labor Endowments Country A aLx = 8 aLy = 4 240 Country B aLx* = 6 aLy* = 2 120 Which country has an absolute advantage in producing good X? Good Y? Which country has comparative advantage in producing good X? What is the autarky relative price of good X for country A? For country B? Draw the world relative supply curve RS for good X. Label all the axes (relative price of good X on the vertical axis and world output of x relative to y on the horizontal axis) and the relevant points. Suppose that the world relative demand RD for good X is given by: (Px/Py) = 7 – 9 * ( ( Qx +Q*x) / (Qy + Q*y) ). With free trade: (i) What will be the equilibrium world relative price of good X be equal to? (ii) Calculate the equilibrium wage rate w in A relative to that…The gravity model implies that lower distance between two countries is associated to more trade between and higher tax revenue in both countries more trade between and higher welfare in both countries more trade between the countries and higher welfare in at least one of the countries None of the above.1 In the Heckscher-Ohlin model, there are two factors, skilled labor and unskilled labor. Use a well-labeled RS-RD graph to show as well as state how wage premium (Ws/Wu) will change in Mexico if Mexico offshores their R&D jobs to UK.
- Indicate whether each of the following statements is trueor false, and explain your reasoning. An intervention which raises nominal GDP will also decrease un-employment. Immigration into a country leads that country to focus more oncapital intensive goods.Briefly explain two (2) of the five (5) policy implications of the Todaro migration model.In the 2-factor, 2 good Heckscher-Ohlin model, a change from autarky (no trade) to trade A. will tend to make rents equal to interest ratesB. will tend to make the wages in both countries less similarC. will tend to make the wages in both countries more similarD. will tend to make the wages equal to returns to capital
- 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.What is the elite/mass theories of policy formulation and implementation?Describe the main differences between Beveridge model, Bismarck model, American model.