1. (two points) Bahrain led the world in net immigration in 2020; it equaled 3.1 percent of the population. What do our models tell us about this net migration’s impact on (1) employment distribution...

1. (two points) Bahrain led the world in net immigration in 2020; it equaled 3.1 percent of the population. What do our models tell us about this net migration’s impact on (1) employment distribution between capital- and labor-intensive sectors, and (2) the wage in Bahrain’s economy in the (a) short run, and (b) long run? Why? (Hint: this question has four parts: [1a] short-run employment distribution, [1b] short-run wage change, [2a] long-run employment distribution, and [2b] long-run wage change.)</o:p>

2. (two points) Last year, 15 Asian countries formed the largest free trade agreement in history, the Regional Comprehensive Economic Partnership. What is the impact of this agreement on products that are monopolistically competitive for consumers of the member-countries? Why?</o:p>

Table 1: Annual Gross Domestic Product (GDP)</o:p>

Guinea</o:p>

Liberia</o:p>

Sierra Leone</o:p>

GDP</o:p>

$12 billion</o:p>

$3 billion</o:p>

$4 billion</o:p>

3. (one point) Liberia borders both Guinea and Sierra Leone. According to the gravity equation, would we expect to Liberia to trade more with Sierra Leone, which has a more similar sized economy to Liberia, or with Guinea, which has a much bigger economy than Liberia? Why?</o:p>

Mar 25, 2021
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