Question-
1. Please, fully evaluate the following saying attributed to Abraham Lincoln: "When we buy manufactured goods abroad, we get the goods and the foreigners get the money. 'When we buy the manufactured goods at home, we get both the goods and the money."
2. Assume tastes and technology are identical in Hong Kong and Japan. Assume Hong Kong is labor abundant and Japan is capital abundant. Assume production of clothing is labor intensive and production of automobiles is capital intensive.
a. Stretch the production possibilities frontiers for Hong Kong and Japan. Explain why you drew them as you did.
b. In autarky, which country has a comparative advantage in production of which good? Show how you know, or why you don't know.
c. what does the Heckscher-Ohlin theorem predict would happen if trade were opened between Hong Kong and Japan?
d. Show and label the autarky and unrestricted trade equilibria, production consumption points, imports and exports, autarky price ratios, and terms of trade.
3. What is referred as the T.A.A. program? What is it origin and purpose? How is it currently evaluated?
4. Are the Ricardian and Heckscher-Ohlin models still relevant to explain the pattern of trade today?
Additional Information-
These questions from economics and the questions deal with international trade. Abraham Lincoln's quote on buying goods from foreign country has been discussed. An example of Hong Kong and Japan in terms of labor and capital exchange has been discussed. Find the detailed answers in the solution.
Word limits- 1300