Hymans and Stafford achieve their surprising result that a country that trades can suffer welfare losses because, in their two-country model, they assume that:
A) the poor country discovers oil.
B) the rich country increases the size of its government too much.
C) the rich country stops investing altogether while the poor country increases investment.
D) the poor country steals technology from the rich country.

Question

Quizplus · Accepted Answer

In Hymans and Stafford's model, if the rich country stops investing while the poor country increases investment, it can lead to a situation where the rich country experiences welfare losses due to changes in trade dynamics and comparative advantages.

Hymans and Stafford Achieve Their Surprising Result That a Country