(ii) Figure 1 shows the flow of goods, services and payments between Kenya (Home Country) and the rest of the world. Figure 1: Flow of goods, services and payments With reference to Figure 1, explain: a) How the bottom portion, showing the international flow of investments and capital differ from the upper portion. b) The relationship between a current account deficit or surplus and the flow of funds (iii)In 2021, Kenya and Uganda traded milk and textiles and apparel as shown in Table 1. Table 1 shows the varying hours of labour used, per unit of output. Table 1: Uganda’s Trade with Kenya, 2021 Country Milk (Litres) Textile and Apparel (Metres)Kenya 7 8Uganda 3 2Required: a) The relative labour cost of milk for each country b) The relative labour cost of textile and apparel for each country c) The country with absolute advantage in the production of each commodity d) The country with comparative advantage in the production of each commoditye) The relative price of milk in terms of textile and apparel for each country carbugunmemnFigure 1: Flow of goods, services and paymentsExportsPayment for exportsImports;Payment for importsHome CountryForeign investmentInvestment income receivedInvestment from abroadInvestment income paidRest of the world

A model of the essential economic interactions within a market economy is the circular flow of…

Answered: (ii) Figure 1 shows the flow of goods,…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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(ii) Figure 1 shows the flow of goods, services and payments between Kenya (Home Country) and the rest of the world.

Figure 1: Flow of goods, services and payments

With reference to Figure 1, explain:

a) How the bottom portion, showing the international flow of investments and capital differ from the upper portion.
b) The relationship between a current account deficit or surplus and the flow of funds

(iii)In 2021, Kenya and Uganda traded milk and textiles and apparel as shown in Table 1. Table 1 shows the varying hours of labour used, per unit of output.

Table 1: Uganda’s Trade with Kenya, 2021

Country

Milk (Litres)

Textile and Apparel

(Metres)

Kenya

Uganda

Required:

a) The relative labour cost of milk for each country
b) The relative labour cost of textile and apparel for each country
c) The country with absolute advantage in the production of each commodity d) The country with comparative advantage in the production of each commodity
e) The relative price of milk in terms of textile and apparel for each country

car
bugu
nme
mn
Figure 1: Flow of goods, services and payments
Exports
Payment for exports
Imports;
Payment for imports
Home Country
Foreign investment
Investment income received
Investment from abroad
Investment income paid
Rest of the world

Definition Video Definition Ability of a country to produce more output with a given level of input or to produce the same level of output with a lower level of input as compared to the other countries. For example, if Country A produces 200 units with the help of 10 units of labor, and Country B produces 300 units with 10 units of labor, Country A has an absolute advantage in the production of the good. Video

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