Question: Consider the Heckscher-Ohlin-Samuelson model we have been studying in class in which Country H has a comparative advantage in computers. Suppose Country H experiences an
Consider the Heckscher-Ohlin-Samuelson model we have been studying in class in which Country H has a comparative advantage in computers. Suppose Country H experiences an increase in its capital supply and this causes its Export Supply Curve for Computers to shift down. (A) Will this increase in its capital supply cause the terms of trade for Country H in the trading equilibrium to increase, to decrease, or to stay the same? Briefly explain how you can determine the answer to this question from the figure which depicts the Export Supply Curve and Import Demand Curve for Computers. (Do not draw the figure, just explain in words.) (B) Will this increase in the capital supply in Country H cause Country F to import more computers or fewer computers or can we not answer this without more information
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