Answered: Would you agree if the UK imposed…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTIONS : D. Would you agree if the UK imposed import protection for wheat and corn to protect domestic wheat and corn farmers? Give reasons and basis for your argument. What are the negative and positive impacts that will be faced by the UK when implementing this protection policy (Give at least 5 answers for each positive & negative impact). POINT D ANSWER : Would defeinetly not go with the idea and not accept the trade proctectionsim, as it of more harm than good. Reasons are as follow: -The restricted options of customers and paying more for products and services. A main consequence of trade protectionism would be that, as there can be limits on how much can be imported, buyers may have a restricted variety of products and services. Shoppers would have a very limited option as to the amount, standard and form of product that might otherwise be available to them without competitive protection due to these quotas. -Exchange rate caps have induced long-term inflation because the domestic nation has kept its currency's value poor. By reducing the value of its currency so that it can maximize its profits and services on international markets at lower costs, any international products sold on its market will potentially see an increase in inflation. -Because of government trade protections, developing countries can never flourish. The approach of protecting its infant industry will be used by a country, but how long is a key concern. In reality, the defense of an infant industry will eventually cost a government substantial sums of money and financial capital to safeguard its infant industry. -A battle of trade within countries. A significant problem with trade protectionism is that if industrial protection policies are instated, nations will take retaliation. The issue here is that if they do not offer their services and products in markets where they generally will, nations will counter. -While some economists think whether trade protectionism would benefit the country's economy, many others feel that the harm may be serious. Willem Buiter, research director at Citi, for instance, said that trade protection policies could spark an international trade war that could possibly provoke a global recession. QUESTIONS : E. Based on the answer to point d, provide policy recommendations so that the UK & America both feel the maximum benefits from international trade for these two commodity products POINT E ANSWER : ......

The United Kingdom and the United States of America produce wheat and maize, respectively.
The following are the domestic prices of the two products:
United States
The United Kingdom
Wheat
$6
£3
Maize
$9
£6

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