国际贸易考试代考 International Trade代写

International Trade–Midterm Exam

国际贸易考试代考 a. A Chinese employer needs to send an employee to the US. The employer knows the above-mentioned Laspeyres indices, but not the underlying prices.

1. 国际贸易考试代考

a.

A Chinese employer needs to send an employee to the US. The employer knows the above-mentioned Laspeyres indices, but not the underlying prices. In China, the employee makes $40,000 per year, calculated at the official exchange rate. How much does this Chinese employer have to pay the employee in the US to make sure the employee can buy the same goods in the US as this consumer was buying in China? Explain, and use a diagram for N = 2 to prove that the employee will actually be better off in the US if paid in this way.

b.

Let SR be the real exchange rate (US baskets of goods per Chinese baskets of goods) defined using the ideal price index P(·). Derive bounds on SR in terms of Laspeyres indices and conclude that 2/5 ≤ SR ≤ 3/5.

c. 国际贸易考试代考

Chinese GDP is 6,000 billion US dollars at the official exchange rate. US GDP is 15,000 billion US dollars. Give a range for the PPP-adjusted GDP of China, in units that allow you to compare Chinese GDP with the above number for the US. Explain.

d.

Suppose that N = 2. Good 1 cannot be traded and good 2 can be traded at no cost. There are labor-only linear technologies in the US and China with labor productivities z_n,j , where n ∈ {1，2} and j ∈ {US,China}. Derive an expression for the real exchange rate that only depends on the function P(·) and the labor productivities z_n,j . Explain why the above evidence indicates that z_2,US / z_1,US /z_2,China /z_1,China.

2. 国际贸易考试代考

Consider a world economy with a home and a foreign country, labeled H and F, respectively. Everyone has the same well-behaved homothetic preferences over consumption goods 0 and 1, and everyone supplies labor inelastically. The home and foreign labor supplies are L_H= L_F = L, and labor cannot move or be traded across borders. The technologies for producing goods 0 and 1 are linear in labor, and the strictly positive labor productivities are denoted by z_w,i, for w∈ {0,1} and i ∈ {H,F}. These labor productivities satisfy z_1,H/z_0,H < z_1,F/z_0,FF as well as z_w,H> z_w,F for both w∈ {0,1}.

a. 国际贸易考试代考

Construct a diagram that shows the production possibility frontiers of the home country, the foreign country, and the world. Carefully label the important elements of this diagram. Explain how you are using the above assumptions about labor productivities.

b.

Copy the production frontiers from part a into a new diagram and add an indifference curve that ensures that the home country produces both goods in the competitive equilibrium. Show the budget constraints associated with this competitive equilibrium, as well as the consumption allocations of the two countries. Explain.

c.

Suppose there is a proportional increase in (z_0,F, z_1,F) that is sufficiently small so that the pattern of specialization does not change. Construct a new diagram, copying what you need from part b, to show how the equilibrium changes. What happens to the budget constraints of the two countries? Who is better off?

d. 国际贸易考试代考

Set up a new diagram with two world production frontiers:

one for foreign labor productivities (z_0,F, z_1,F) such that the indifference curve of the representative world consumer at the point where the two countries specialize has the same slope as the production possibility frontier of the home country;
another for foreign labor productivities (Øz_0,F, Øz_1,F), with Ø > 1 such that the indifference curve of the representative world consumer at the point where the two countries specialize has the same slope as the production possibility frontier of the foreign country.

Hint: reverse engineer by first drawing two rays through the origin and two homothetic indifference curves. Then draw production possibility frontiers with the desired slopes.

e.

Suppose there is steady technological progress in the foreign country that raises (z_0,F, z_1,F) over time, keeping the ratio z_0,F/ z_1,F constant. Suppose the home country initially produces both goods. Use your answers to c and d to explain what happens to the pattern of specialization over time. What happens to welfare in the home country over time? Explain.

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