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Chapter 5The Standard Trade Model
(Chapter Organization
A Standard Model of a Trading Economy
Production Possibilities and Relative Supply
Relative Prices and Demand
The Welfare Effect of Changes in the Terms of Trade
Determining Relative Prices
Economic Growth: A Shift of the RS Curve
Growth and the Production Possibility Frontier
Relative Supply and the Terms of Trade
International Effects of Growth
Case Study: Has the Growth of Newly Industrializing Countries Hurt Advanced Nations?
International Transfers of Income: Shifting the RD Curve
The Transfer Problem
Effects of a Transfer on the Te
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