Question

for mobile factors, for fixed factors used to 33) In the specific factors model, the effects of trade on welfare are for fixed factors used to produce the exported good, and produce the imported good. A) ambiguous; positive; negative B) positive; positive; positive C) ambiguous; negative; positive D) positive; ambiguous; ambiguous E) negative; ambiguous; ambiguous 34) The overall welfare effects of trade are A) positive; the domestic economy grows faster than do foreign eco b) positive; more people gain from trade than lose from it C) negative; some people are made worse off by trade D) negative; those who lose can compel those w E) positive; those who gain can compensate those who lose and st lose can compel those who gain to compensate them for their losses n can compensate those who lose and still be better off 35) A country's budget constraint states that A real income in the exporting country must be equal to 1 the exporting country must be equal to real income in the importing country. B) the value of exports must be equal to the value of imports. C) a country will engage in trade only if the value of imports exceed the value oss a country engages in trade, the value of exports cannot exceed the value of goods produced. C) a country will engage in trade only if the value of exports exceeds the value of imports.

Answer 1

Answer 33. A. ambiguous; positive; negative

Reason-In specific factors model when trade opens factors of production used in exporting goods gains while factors of production used in imported goods losses.

Answer 34. positive; those who gain can compensate those who lose and still be better off

Reason- Trade is beneficial when those who gain can compensate the ones who losses and still there are additional profita left.

Answer 35.the value of exports must be equal to the value of imports

Reason- Budget constraint for a country states that the income gained from exporting should be equal to the expenditure on imports.