Question: Comment on the following statement by using appropriate theoretical models and related diagrams: If two countries are technologically identical, they cannot benefit from trade.

Comment on the following statement by using appropriate theoretical models and related 

Comment on the following statement by using appropriate theoretical models and related diagrams: "If two countries are technologically identical, they cannot benefit from trade." "Following the global financial crisis, we saw that nominal interest rates fell to around zero in many European countries. As a result, such countries were caught in what economists call a "liquidity trap". Explain the main economic policy implications of such a case by using the DD-AA model and discuss potential solutions.

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Statement 1 If two countries are technologically identical they cannot benefit from trade The statement suggests that if two countries have identical technology levels they would not gain any advantag... View full answer

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