Study Guide for Mankiw's Brief Principles of Macroeconomics, 7th
7th Edition
ISBN: 9781285864266
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14.2, Problem 2QQ
To determine
The two different markets and two different prices determined by them.
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Chapter 14 Solutions
Study Guide for Mankiw's Brief Principles of Macroeconomics, 7th
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- A country produces two goods: coconuts and umbrellas. Their production possibilities frontier (PPF) places coconuts on the x-axis and umbrellas on the y-axis. How would a drought that makes it difficult to grow coconuts but does not affect the production of umbrellas change the PPF? Neither the value of the x-intercept nor the y-intercept would change The value of the y-intercept would increase but the value of the x-intercept would not change The value of the x-intercept would increase but the value of the y-intercept would not change Both the value of the x-intercept and the y-intercept would increase The value of the y-intercept would decrease but the value of the x-intercept would not change The value of the x-intercept would decrease but the value of the y-intercept would not changearrow_forward"Consider a small open economy that produces and consumes two goods: textiles and technology. The country has experienced a technological breakthrough in textile manufacturing, increasing its productivity. At the same time, the global demand for technology, the country's other export, has decreased. Analyze the following: a) How would the technological breakthrough in textile manufacturing affect the country's production possibility frontier? b) What could be the short-term and long-term effects on the country’s terms of trade? c) Discuss how the decrease in global demand for technology could influence the country's export revenues and economic growth. d) Propose one policy measure the government could take to mitigate any negative impacts on the economy due to these changes."arrow_forwardWho are the winners and losers of the free trade between two countries? Can free trade between the two countries make consumers of both countries better off? In answering this question, consider discussing: How are you and your household connected to the global economy? Which imported goods and services do you buy? Are your consumption patterns based on comparative advantage? How do US trade patterns, based on comparative advantage, contribute to income inequality in the US, according to the Heckscher-Ohlin model? How has trade affected international income inequality? What were some recent tariffs? Who really pays the cost of tariffs?arrow_forward
- As per the Stolper-Samuelson analysis, in an open economy, the factor used extensively in the economic sector with an increasing price: benefits as a producer, but loses more as a consumer. benefits, regardless of the usual consumption certainly benefits as a loses both as a producer and as a consumer.arrow_forwardWhat new opportunities are available in the goods markets and the financial markets in an open economy?arrow_forwardDerive the production possibilities frontier (PPF) for Home and Foreign and plot it in a graph with good x in the horizontal axis and good y in the vertical axis.arrow_forward
- Explain how each of the following situations would affect a nations production possibility curve. A technological innovation allows the nation to more efficiently convert solar energy to electricity.arrow_forwardDo you think the Heckscher-Ohlin model sufficiently explains trade between countries? Explain why you think yes, or noarrow_forwardIs it possible to have a comparative advantage without having any absolute advantages ? Yes or Noarrow_forward
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