1.suppose that an economy-initially in equilibrium with balanced international payments and at the domestic macroeconomic targets for employment and price stability -- experiences the expected effects of a sharp, deep, drop in income-output among its trading partners. ( a). describe the initial effects on the first country's international payments and domestic macroeconomic balance. THen( b). contrast the "adjustment mechanism" in response to the resulting disequilibrium (incipient or actual) in the balance of payments (official settlements approach) under (a) a flexible (freely fluctuating) exchange rate system with that under (b) a fixed (gold standard) exchange rate system.

2.List-only- the assumptions made about technology in the factor proportions (either Heckshcher-Ohlin or the neo-factor proportions are the same on this point) theory. Then explain how altering one at a time each of those assumptions leads to a deempahsis of national factor endowments in explanation of differences among countries in the pattern of comparative costs, and trade. In other words, explain how nonHeckscher-Ohlin assumptions about technology lead to a neo-technology theory of comparative costs which is contrary to the (neoClassical) factor propotions explanation--but consistent with the Classical emphasis on differences in unit labor costs.

3.compare and contrast the role of Macroeconomic phenomeno (inflation, unemployment, balance of payments, economic growth snd income distribution) in detrmining the PATTERN of international trade in goods- in four different theories of the pattern of trade: neomercatilism, classical (labor theory), factor of productions and neotechnology theories.

answer these 3 questions, each one page (single space) by monday (12/15). thanx...