Author Question: Implementing short-term capital controls during the Asian crisis caused Malaysia to recover more ... (Read 73 times)

Ebrown · **on:** Jun 30, 2018

Implementing short-term capital controls during the Asian crisis caused Malaysia to recover more slowly than other countries.

Indicate whether the statement is true or false

Question 2

Carefully explain why there are gains from intraindustry trade.

What will be an ideal response?

wfdfwc23 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

FALSE

Answer to Question 2

The increased size of markets leads to lower costs through the effect of scale economies. At the same time, competition among firms forces them to pass on their lower costs to consumers in the form of lower prices. The expansion of the market that occurs with trade leads eventually to an increase in the number of firms (although the distribution of firms between countries is unclear). Consumers benefit both from lower prices and from an increase in the variety of goods available to them.