Assume the United States has a trade surplus with Brazil and imposes new tariffs on Brazilian coffee, a major export to the United StatesBrazil responds by imposing its own tariff on U.S.-made agricultural machinery.The Brazilian purchase of U.S. agricultural machinery is a debit to which subaccount of the Brazilian balance of payments?What will happen to the quantity of agricultural machinery produced by Brazilian manufacturers?

Tariff would act as an income to the the US and expenditure for Brazil

Answered: trade surplus

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume the United States has a trade surplus with Brazil and imposes new tariffs on Brazilian coffee, a major export to the United States

Brazil responds by imposing its own tariff on U.S.-made agricultural machinery.

1. The Brazilian purchase of U.S. agricultural machinery is a debit to which subaccount of the Brazilian balance of payments?
2. What will happen to the quantity of agricultural machinery produced by Brazilian manufacturers?

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