Australia and NZ both produce and consume two goods, wool and mutton, using two inputs K and L; wool is relatively L intensive, and mutton is relatively K intensive. Australia is relatively K abundant. What assumptions must you make (other than all the HO model assumptions), for Australia to experience immiserizing growth (IG)? Explain fully and then show Australia's IG growth graph with Australia's X'able good on the horizontal axis. Be sure to provide all relevant theorem names and specific forms.

Australia and NZ both produce and consume two goods, wool and mutton, using two inputs K and L; wool is relatively L intensive, and mutton is relatively K intensive. Australia is relatively K abundant. What assumptions must you make (other than all the HO model assumptions), for Australia to experience immiserizing growth (IG)? Explain fully and then show Australia's IG growth graph with Australia's X'able good on the horizontal axis. Be sure to provide all relevant theorem names and specific forms.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Productivity And Growth

Section: Chapter Questions

Problem 1.2P

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