Problem
1. There was sluggishness in the Japanese economy in the 1990s, and Japan's terms of trade improved at the same time. Can you interpret and analyze this experience in the context of what you have studied in this chapter? Explain.
2. Explain how the production-possibilities frontier of the unified Germany might differ from the PPF of the former Federal Republic of Germany (West Germany), keeping in mind that West Germany, in the two-factor context, was generally considered relatively capital abundant and the German Democratic Republic (East Germany) was generally considered relatively labor abundant. What would theory suggest about the differences in relative output of capital intensive goods and labor-intensive goods of the former West Germany compared with the unified Germany? What would theory suggest, if anything, about the trade pattern of the new Germany compared with that of the former West Germany if it is assumed that the former West Germany was capital abundant relative to its trading partners?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.