4. (20%) Depict on graph and briefly explain economic consequences of export tariff: for exporters; for domestic consumers; · for government budget; for national economic welfare as a whole.
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- (A). Figure 1: equilibrium exchange rate is at point 1 where expected dollar returns on dollar and euro deposits are equal. Exchange rate, Egje Return on dollar deposits 2 Ese Esse Ege Expected return on euro deposits R₂ Rates of return (in dollar terms) Suppose there is a rise in the dollar interest rate. Discuss the effects of this rise in the dollar interest rate on the exchange rate.00 7 F. PRICE (Dollars per ton) 4. Effects of a tariff on international trade The following graph shows the domestic supply of and demand for soybeans in Honduras. The world price (Pw) of soybeans is $530 per ton and is represented by the horizontal black line. Throughout the question, assume that the amount demanded by any one country does not affect the world price of soybeans and that there are no transportation or transaction costs associated with international trade in soybeans. Also, assume that domestic suppliers will satisfy domestic demand as much as possible before any exporting or importing takes place. 2. Domestic Demand Domestic Supply 770 740 710 680 650 620 06 P, 530 MacBook Pro Search or type URL 4. 51 9.96 25 (Table) Referring to the table, we see that France may now consume wine and cheese. Country and Product Before Specialization After Specialization After Trade 45 France 09 Checse England Wine Cheese O more; less 20 O less; the same amount of O less; more O more; the same amount of Unit 7- Chapter 1...xlsx O Unit 7- Chapter 1..xlsx O Topic 2 (2).docx Topic 2 (1).docx Show all 11:07 PM search 73°F 4202/8/21 delete 10 92 num lock -> 7. home enter T shift end alt ctrl
- 5. Suppose a capital abundant country, such as Germany, is entering a free trade agreement with a resource- rich country such as Norway. (YOU DO NOT NEED TO USE A DIAGRAM FOR THIS QUESTION) (a) Explain the pattern of trade, as predicted by Heckscher Óhlin Theorem, between these two nations if they have the same technology and same taste. (b) Explain what happens to price of exports and imports in each country in the post-trade environment. (c) Does trade between these two countries create winners and losers? Explain your answer by discussing what happens to real wages and real returns to resources in these nations. (d) Does the concept of "magnification effect" as predicted by Stolper- Samuelson Theorem apply to your answer in part (c)? Why?15. If China wanted to maintain both monetary autonomy and a fixed nominal exchange rate in regard to the United States in the long run, (a) the Chinese would want to sell their financial assets. (b) the Chinese would have to want to buy American goods. (c) the price level in China would have to move in tandem with the U.S. price level. (d) the law of one price would have to hold for at least one good. (e) Chinese interest rates would have to move in tandem with U.S. interest rates.please help i beg :(
- 1. (T/F) The trade tariffs imposed on Chinese product unambiguously increased U.S. producer surplus and consumer surplus, while total U.S. welfare decreased. 2. (T/F) Over the past two years, the prices of new cars and used cars showed significant growth. The price increases in new and used cars were both caused by the decrease in supply due to the semiconductor shortage. 3. (T/F) Charles dislikes Red Vines Licorice®. His indifference curves are positively-sloped lines or curves with positive vertical intercepts with Red Vines Licorice on the horizontal axis and other snacks on the vertical axis. 4. (T/F) CPI (Consumer Price Index) measures the cost for a fixed amount of products in the same basket. One criticism is that it ignores the substitution effect and could overestimate the actual price increase.26. The arguments for restricting trade Suppose there is a policy debate over whether the United States should impose trade restrictions on imported tires: The president of the United States argues that the government should impose a tariff on tires because they are a necessary input into the production of various weapons. Free trade would make the United States overly dependent on foreign countries for the supply of tires. In case of a war, the United States might not be able to make or purchase enough tires and, therefore, would not be able to make enough weapons to defend itself. Which of the following justifications is the president using to argue for the trade restriction on tires? Jobs and income argument Infant-industry argument OUsing-protection-as-a-bargaining-chip argument O Unfair-competition argument National-defense argument
- Please answer all parts of the questions.(A & B) Thank you. A. Suppose American car manufacturers can produce model Falcon cars for $25000, which can also be imported from Japan at $25,000. US manufacturers need to import $15000 worth of materials from the rest of the world to produce the cars. What are the domestic value-added, the nominal and the effective rates of protection? Suppose the US puts a 15% tariff on imported Falcon cars from Japan. What is the effective rate of protection? Suppose in addition to the 15% tariff mentioned in (2), USA also puts a 10% tariff on parts from the rest of the world? What is the effective rate of protection? B. Discuss two arguments in favor of and against ‘the Labor Argument’ of protection.Question 5[Consider a small open economy such as Australia. If Australia’s saving rate (gross domestic saving as a % of GDP) is 15% , while its investment rate (domestic investment as a % of GDP) is 25%, the economy will experience a trade surplus, meaning that receipts from exports exceed expenditure on imports. (100 words)]Your answer: [True/False/Uncertain and explain why]1933 PART IV: APPLICATION: MATCHING (1 x 30 = 30 marks) A- Match the term in Column A with its correct counterpart in Column B, and place the appropriate letter in Column C. Column A 1- natural resources sqmo 2- infrastructure 3- importing 4- comparative advantage 5- exporting Column B Column C (a) All the economic activities that work for the selling and shipping of finished products or raw materials from a domestic country to other countries or nations. (b) The economic theory that states that for the production or the selling of specific goods or services, some countries have the means to perform better that other countries under the same circumstances. (c) Materials available in nature, that are not the result of a human transformation and that have the potential to be of economic value. (d) The economic process which consists of buying raw materials or finished products from other nations in order to use them domestically. (e) A system well organized and planed by an official…
