Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 32, Problem 4PA
To determine
The impact of reduction in the trade barriers.
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Small Island Developing States (SIDS), particularly our Caribbean islands, are normally accused by our economists of being import dependent. Why then are we always hesitant to impose Tariffs on imports to solve our Balance of Payments problems? Why would it be slow to work on our appetites? Discuss this issue in relation to the concept of Elasticity of Demand.
Also, why is the Government always imposing more and more sin taxes on alcohol and cigarettes? Is the Government so concerned about our sins when we consume these demerit goods?
Economists generally agree that trade restrictions are detrimental to trade and reduce government efficiency. Why then do
governments restrict trade? Arguments for restricting trade include to promote national defense, to impose sanctions on other
countries, to protect domestic infant industries, to create or preserve domestic jobs, to ensure fair competition, and to retaliate for
unfair trade policies of other governments
Match each action to the correct argument for trade intervention
Limits on trade with certain
countries
import duties on products
from a foreign country
Subsidies for industries
considered vital to national
security
Subsidies for emerging
industries
Counterpan on imports
Argument for
Intervention
To provide for national
defense
To impose sanctions
To protect infant industries
To ensure fair competition
To provide retaliation
Action
Counterban on imports
Limits on trade with certain
countries
import duties on products
from a foreign country
Subsidies for emerging…
Which of the following is NOT a law that impacted U.S. tariffs?
A.
Food, Drug, and Cosmetic Act
B.
Smoot-Hawley Act
C.
McKinley Act
D.
Fordney-McCumber Act
Chapter 32 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Should the Trade Embargo on Cuba Be Lifted? Three years after Fidel Castro took power in Cuba and installed a Communist regime, the U.S. government initiated a trade embargo against the nation. The embargo was intended to put economic pressure on the Cuban government. Today the embargo is still in effect— one of the longest trade embargos in modern history. Opponents on each side of the issue debate its effectiveness. Who is right? As you read the selections, ask yourself: Should the trade embargo on Cuba be lifted or remain in place? PRO A HALF-CENTURY OF FAILURE For almost half a century, the U.S. government has tried to isolate Cuba economically in an effort to undermine the [Communist] regime [of Fidel Castro] and deprive it of resources. Since 1960, Americans have been barred from trading with, investing in, or traveling to Cuba. . . . As a foreign policy tool, the embargo actually enhances Castro’s standing by giving him a handy excuse for the failures of his…arrow_forwardPlease help.arrow_forwardA small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country’s government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $11 per T-shirt and domestic production rises to 15 million T-shirts per year. On average, each worker in the T-shirt industry produces 20,000 T-shirts. What would be the loss in consumer surplus for each job created (as a result of the quota)? SHOW ALL YOUR WORK. Find the decrease in consumer surplus. Find the increase in quantity supplied (change in production). Find the number of jobs created. Find the loss in consumer surplus per job created.arrow_forward
- Which scenario describes the operation of a tariff? Angola opens up trade with the world corn market and decides to maintain its previous market price. Consumers in Turkey, who pay $4 per cup of tea, demand that the government open up trade with the world market because they know the world price is $2 per cup. Ireland taxes the import of potatoes in order to keep domestic farmers in business. Norway becomes an exporter of fireworks after it opens up trade with the world market and realizes its market price is lower than the world price. Which is NOT an effect of a tariff? deadweight loss a domestic market price above world market price Activate Windows Go to Settings ho activate Win increased demand decreased importsarrow_forwardA small country imports T-shirts. With free trade at a world price of $10, domestic production is 10 million T-shirts and domestic consumption is 42 million T-shirts. The country's government now decides to impose a quota to limit T-shirt imports to 20 million per year. With the import quota in place, the domestic price rises to $12 per T- shirt and domestic production rises to 15 million T-shirts per year. The quota on T- shirts causes domestic consumers to A) gain $7 million. B) lose $7 million. C) lose $70 million. D) lose $77 millionarrow_forwardThe book states “The pain caused by the movement toward a free trade regime is a short-term phenomenon, while the gains from trade once the transition has been made are both significant and enduring”. Unions in developed nations often oppose imports from low-wage countries because of the negative impacts that occur to the workers. I personally do not believe that such competition is unfair. The union’s argument is in the best interest of the people they represent, and not the country as a whole. If imports are stopped from low-waged countries, it would force developed countries to use and produce local goods and jobs. With more jobs and the use of more local goods, this gives an advantage to the union workers, but leaves our country at a disadvantage. Some disadvantages include the price of goods increasing, other countries not wanting to work with us, we will lose out on products that we can’t make, and it’s ultimately not in the best interest for economic growth in the long run.…arrow_forward
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