Membership in a customs union may be either welfare improving or welfare worsening. Illustrate and explain
What will be an ideal response?
It can be welfare worsening if trade diversion is large and trade creation is small. Graphically, this will be more likely when the partner country's price is quite a bit higher than the world price.
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Refer to Figure 21-6. The loanable funds market is given in the figure above. If the current real interest rate is 5 percent, which of the following is true?
A) There is a surplus of loanable funds in the market. B) The loanable funds market is in equilibrium. C) The quantity of loanable funds being demanded in the market is less than $90 million. D) There is a shortage of loanable funds in the market.
High income economies, with only about one-sixth of the world's population, produced more than one-third the world's output
Indicate whether the statement is true or false