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ECON231_Assignment1_F11 - ECON 231 Section 2 Introduction...

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Page 1 of 2 Pages ECON 231 – Section 2 Introduction to International Economics Instructor: Sharif F. Khan Department of Economics University of Waterloo Fall 2011 Suggested Solutions to Assignment 1 (Optional) Part B Short Questions B1. Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canada’s is 60 percent larger). But Canadian trade is twice as large, relative to GDP, as Australia’s. Why should this be the case? B2. Mexico and Brazil have very different trading patterns. Mexico trades mainly with the United States, Brazil trades about equally with the United States and with the European Union; Mexico does much more trade relative to its GDP. Explain these differences using the gravity model. B3. Over the past few decades, East Asian economies have increased their share of world GDP. Similarly, intra-East Asian trade – that is, trade among East Asian nations – has grown as a share of world trade. More than that, East Asian countries do an increasing
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