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Which assumption of HO cannot be used in Classical model as it eliminates the basis for international trade
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- Which assumption of HO cannot be used in Classical model as it eliminates the basis for international trade. Explain.Outline the 9 assumptions of classical theory and explain each assumption.Cite at least two (2) real life scenario based on the concept of Neo-Classical Theory. Give Emphasis on the details covering the concept of this theory.
- Outline the 9 assumptions of classical theory and explain each assumption in detail.consider the generalized Romer model where the fishing-out effect and the decreasing returns to research are allowed. suppose the number of researchers grows 5% each year and labor-augmenting technology level grows 1% each year. then, there exists an upper limit for the fishing-out effect in steady state. evaluate whether is true, false or uncertain and why?Sunshine is a small open economy described by the following long-run classical equations where Y is the economy's real GDP, T-taxes, G-government spending, NX-net exports, l-investment, C-consumption, r-domestic interest rates, r* - world interest rates. Y = 4000 G = 1250 T = 1000 C = 250 + 2/3 (Y-T) I = 450 - 25r NX = 1250 - 175epsilon r =r^ * =4 a) Required: Select the appropriate answer that represent [i] investment, [ii] national savings, [iii] equilibrium exchange rate and [iv] trade balance. b) Suppose the government of sunshine cut its spending to 2,000. Required: Select the appropriate answer that represent [i] investment, [ii] national savings, [iii] equilibrium exchange rate and [iv] trade balance. c) Now suppose the world interest rate falls from 8 to 3 percent, (G is again 2000). Required: Select the appropriate answer that represent [i] private savings, [ii] public savings, [ii] national savings, [iv] investment, [v] trade balance and [vi]…
- Compare the effects of a negative demand shock, for example, a decline in autonomous investment, in the Kesnesian and Classical models show the effects of this shock on the level of real income, employment, the price level and the rate of interest in both models Answer this question only by using diagrams.Consider a one-period model like the one considered in class. There are three states. At the beginning, everyone is unemployed. In the second stage, individuals search for a job. Suppose that the probability of finding a job is 0.5. in the third stage, individuals who found a job will work, while those who did not find a job remain unemployed. Each job pays wage w=10. If a person does not find a job he/she will collect unemployment benefits b=4. a)What is the expected income at the beginning of the economy (i.e. before the job search)?Please no written by hand and no image Analyse Australia's economy in 2023 using the Mundell Fleming model with regards to using monetary and fiscal policy to deal with high inflation, and high interest rates.
- The classical model uses the assumption that: OPTIONS: all wages and prices are flexible. monopoly is widespread in the economy. interest rates are not flexible. economic markets are fragile and have no tendency to move towards an equilibrium.Piketty (2014) argues that a fall in the growth rate of the economy is likely to lead to an increase in the difference between the real interest rate and the growth rate. This problem asks you to investigate this issue in the context of the Ramsey Cass Koopmans model. Specifically, consider a Ramsey Cass Koopmans economy that is on its balanced growth path, and suppose there is a permanent fall in g. (a) How, if at all, does this affect the k = 0 curve? (b) How, if at all, does this affect the c = 0 curve? (c) At the time of the change, does c rise, fall, or stay the same, or is it not possible to tell? (d) At the time of the change, does r - g rise, fall, or stay the same, or is it not possible to tell?Consider a country whose economic structure matches the assumptions of the classical model. After reading a recent best-seller documenting a growing population of low-income elderly people who were ill prepared for retirement, most residents of this country decide to increase their saving at any given interest rate. Explain whether or how this could affect the following: a. The current equilibrium interest rate b. Current equilibrium real GDP c. Current equilibrium employment d. Current equilibrium investment e. Future equilibrium real GDP