from an economic point of view, india and china are somewhat similar: both are huge, low-wage countries, probably with similar patterns of comparative advantage, which until recently were relatively closed to international trade. China was the first to open up. Now that india is also opening up to world trade, how would you expect this to affect the welfare of china? Of the united states? (hint: think of adding a new economy identical to that of china to the world economy.)"
Answers
Answer:
From China's perspective, the world relative supply curve will shift to the right. This shift will worsen China's terms of trade. The U.S. purchase of Chinese exports will benefit the U.S. by increasing the relative price of goods that the U.S. exports.
Answer:
A. The global relative supply curve will shift to the left from China's standpoint. China's trading terms will improve as a result of this transition. Purchases of Chinese products by the United States will harm the United States by lowering the relative price of goods that the United States exports.
B. The world's relative supply curve will shift to the right from China's standpoint. China's trading terms will deteriorate as a result of this transition. The purchase of Chinese products by the United States will benefit the United States by raising the relative price of goods that the United States exports.
C. The global relative supply curve will shift to the left from China's standpoint. China's trading terms will deteriorate as a result of this transition. The United States' purchasing of Chinese exports will help the United States. By raising the relative price of commodities exported by the United States
D. The world's relative supply curve will shift to the right, according to China. China's trading terms will improve as a result of this transition. The purchasing of Chinese products by the United States will harm the United States by lowering the relative price of goods that the United States exports.