4. Suppose that Egypt and the EU can only trade in cotton and wheat. Egyptian economy is smaller than that of the EU. The opportunity cost of 1 yard of cotton is 1.2 kg of wheat in Egypt. The world price of 1 yard of cotton is 1.1 kg of wheat. If there are no obstacles to trade, all markets are perfectly competitive and transportation is costless, then most likely in the long run. a. Egypt will import both cotton and wheat. b. Egypt will export both cotton and wheat. c. Egypt will export cotton and import wheat. d. Egypt will export wheat and import cotton. 5. For a fixed exchange rate system, if the home demand for the foreign currency increases, then a. The exchange rate is forced to change for sure. b. None of the statements is true c. The supply of the foreign currency by home central bank or treasury department would increase, so that the fixed. d. the supply of the foreign currency by foreign countries would automatically increase, so that the exchange rate

4. Suppose that Egypt and the EU can only trade in cotton and wheat. Egyptian economy is smaller than that of the EU. The opportunity cost of 1 yard of cotton is 1.2 kg of wheat in Egypt. The world price of 1 yard of cotton is 1.1 kg of wheat. If there are no obstacles to trade, all markets are perfectly competitive and transportation is costless, then most likely in the long run. a. Egypt will import both cotton and wheat. b. Egypt will export both cotton and wheat. c. Egypt will export cotton and import wheat. d. Egypt will export wheat and import cotton. 5. For a fixed exchange rate system, if the home demand for the foreign currency increases, then a. The exchange rate is forced to change for sure. b. None of the statements is true c. The supply of the foreign currency by home central bank or treasury department would increase, so that the fixed. d. the supply of the foreign currency by foreign countries would automatically increase, so that the exchange rate

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 1CQQ

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Similar questions

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