Author Question: Suppose that trade in asset is not allowed but the two countries sign a treaty that guarantee the ... (Read 113 times)

james9437 · **on:** Jun 30, 2018

Suppose that trade in asset is not allowed but the two countries sign a treaty that guarantee the sending of 25 tons of kiwi in good time by the high output country in that season. What will the outcome of such a treaty? Explain why.

What will be an ideal response?

Question 2

Countries that trade a small amount with a single foreign country tend to float their exchange rate to the foreign country's currency.

Indicate whether the statement is true or false

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

Answer to Question 1

The outcomes will be exactly the same as in Case D above. In other words, rather than signing a treaty, just leaving the financial markets to function will lead us to the desirable results.

Answer to Question 2

TRUE