Question

True or false and give reasoning for these questions.

1) Growth in labor and capital as inputs of production in a small country lead to respectively ambiguous and positive welfare effects for the average person of a country.

2. FDI in a small, open, labor-scarce country has an ultra-protrade production effect.

3. According to Rybczynski theorem, factor growth results in either an ultra-protrade or ultra-antitrade production effect.

4. Eurasian Union is an economic union as well as a monetary union.

5. Benefits of FTA are higher if the country has elastic demand and inelastic supply curve.

Answer 1

Answer 1

1 True - Because in a small country the business provide the economy a greater support by goiving employement ,labor ,workforce etc .If the input of the production include the growth in the labor and capital will lead to the positive welfare of the socety of the country .

2.False -In financially developed countries the FDI leads to higher growth rate economically and in poor countries it does not have ultraedge protrade production effect or growth  because of the financial market and education level or in the scarce where demand is insufficient to meet

3 True - Because if the endowment of some resource increase , the industry which is utilizing the resource intensively will have its output increased while the industry which is not utilizing intensively will have a decreased output according to the rybzybski theorem so either it will have protrade or antitrade production effect in general

4True - because the EEU which is eurasian economic union is a economic union of the states whuich are located in eastern europe ,wetern asia,central asia .Also EMU which eurasian monetry union which involve the fiscal policies and economic cordination is a common moentry policy union as well.

5 True-In case of elastic demand and inelastic supply curve   the free trade agreemnt will provide a grwoth certainly to the economy of both the countries by competition,greater choice,lower price,economies of scale etc .

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