International Economics Assignment

Q1. Carefully set up the simple two-good general equilibrium model for a "small country," then show how a shift from isolation to free trade improves national welfare. Highlight international trade's gains both from exchange and from specialization.Fully explain the shifts and lines you make.

Q2. Set up Heckscher-Ohlin model of international trade and show how the export of one country is the import of the other country and explain each step fully.

Q3. 1. Assuming that the initial value of $100 grows at a rate of 7.2 percent, what is the value after:

a. 1 year?

b. 10 years?

Q4. Suppose two economies, A and B, start out with the same very low per capita real incomes of $1,000, but A grows at 1 percent per year and B grows at 2 percent. What will be the per capita real incomes of A and B after:

a. 1 year?

b. 10 years?