You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. automobile industry is concerned about foreign car producers exporting their goods to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a quota 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 quota.
You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. automobile industry is concerned about foreign car producers exporting their goods to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a quota 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 quota.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Analyzing the effects of a trade deficit
Transcribed Image Text:Tommyny une cut or a reverenc
You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. automobile industry is concerned about foreign
car producers exporting their goods to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a quota 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 quota.
REAL EXCHANGE RATE (Units of foreign currency per dollar)
Supply
Demand
iMessage
Demand
Supply
MacBook Air
+10+
Transcribed Image Text:REAL EXCHANGE RATE (Units of foreign currency per dollar)
Given this change, the dollar
Supply
QUANTITY OF DOLLARS
Change due to a quota
80
Demand
Fill in the following table with the effect of a quota on the following items:
Q
Supply of Loanable Funds
A
Demand
iMessage
Supply
Real Interest Rate National Saving
MacBook Air
F7
DII
F8
Net Exports
F9
F10
a
F11
A-Z
219
bongo
A+
F12
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