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Heckscher-Ohlin Theory (H-O Theory) is an external trade theory developed to explain the causes of international trade based on differences in factor endowments. The theory was first proposed in 1919 by Swedish economist Eli Heckscher and later systematized by his student Bertil Ohlin in 1933. The H-O Theory extends Ricardo’s theory of comparative advantage by arguing that the fundamental determinant of trade between countries is differences in factor endowments. Unlike Ricardo’s theory, the Hec

Macroeconomic equilibrium is a state in which total demand equals total supply in an economy, ensuring economic stability. Total demand represents the sum of all expenditures on goods and services across the entire economy, while total supply reflects the economy’s current production capacity and available resources. Achieving this equilibrium indicates that the economy is operating efficiently, unemployment is at its natural rate, inflation is close to target levels, and factors of production a