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- 4. Analyzing the effects of a trade deficit You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. manufacturing industry is concerned about competition from overseas low-cost producers exporting their goods to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. Supply Demand -- Supply EXCHANGE RATE (Units of foreign currency per dollar) DemandConsider a country with a flexible exchange rate, and which initially has a current account surplus of zero. Then, suppose there IS an anticipated InCrease in tuture total tactor productivity. a) Determine the eauilibrium etects on the domestic economv in the case where there are no capita. controls. In particular, show that there will be a current account dehicit when arms and consumers anticipate the increase in future total factor productivity. b) Now, suppose that the government dislikes current account deficits, and that It imposes capital controls in an attempt to reduce the current account deficit. With the anticipated increase in future total factor productivity, what will be the equilibrium efects on the economy? Do the capital controls have the desired efect on the current account deficit? Do capital controls dampen the effects of the shock to the economy on output and the exchange rate? Are capital controls sound macroeconomic policy in this context? Why or why not?Please no written by hand solutions
- Please no written by hand solutionU.S. firms involved in international trade have to a. ignore U.S. inflation and ignore value of the dollar relative to foreign currencies. b. ignore U.S. inflation and guess value of the dollar relative to foreign currencies. Oc. International transactions are not affected by inflation or foreign exchange. O d. anticipate U.S. inflation and guess value of the dollar relative to foreign currencies. e. anticipate U.S. inflation and ignore value of the dollar relative to foreign currencies.NAFTA attempts to keep other nations' low prices from hurting domestic business. O True O False
- Do not use chatgpt.Based on the Balance of Payments account presented in this table, the balance of trade is: a. 2300 b. -2600 c. -300 d. -200How is the merchandise trade balance calculated? a. the total value of the economy's goods minus the value of exported goods b. the value of exported goods minus the value of imported goods O c. the total value of the economy's goods minus the value of imported goods d. the value of exported goods plus the value of imported goods e. the value of imported goods minus the value of exported goods
- What is likely to happen to the total volume of trade in a small open economy with a flexible exchange rate that engages in trade policy that restricts imports? a.it will decrease then increase b.it will remain the same c.it will increase d.it will decrease5 Trade at Negotiated Mid-price. The mid-price for exchange between France and China can be calculated as follows: Toys Wine China's domestic price 10 to 7 France's domestic price to 7 Negotiated mid-price 6 to 7 What happens to total production and consumption? Please give me within 15 mnt7. The GATT strongly favors tariffs as a protective measure over quotas or other nontariff measures. It encourages new members to convert quotas to their tariff equivalents. One of the main reasons tariffs are preferred is because they are more transparent, particularly by comparison to nontariff measures. Explain the idea of transparency, and how nontariff measures may be nontransparent.