Why do American households and businesses buy things from
foreigners? What are the characteristics of the items we buy from
foreigners? What are the characteristics of the things we sell to
foreigners?
Thursday, 22 May 2014
Means-tested transfer payments
Means-tested transfer payments reduce the current poverty rate. However,
they also create an incentive structure that discourages
self-sufficiency and self-improvement. Thus, they tend to increase the
future poverty rate. Welfare programs essentially purchase a lower
poverty rate today in exchange for a higher poverty rate in the future.”
Evaluate this statement.
Tariffs and import quotas
Can both of the following statements be true? Why or why not?
a. “Tariffs and import quotas promote economic inefficiency and reduce the real income of a nation. Economic analysis suggests that nations can gain by eliminating trade restrictions.”
b. “Economic analysis suggests that there is good reason to expect that trade restrictions will exist in the real world.”
a. “Tariffs and import quotas promote economic inefficiency and reduce the real income of a nation. Economic analysis suggests that nations can gain by eliminating trade restrictions.”
b. “Economic analysis suggests that there is good reason to expect that trade restrictions will exist in the real world.”
U.S. auto industry
Suppose that a very high tariff were placed on steel imported into the
United States. How would that affect employment in the U.S. auto
industry? (Hint: Think about how higher steel prices will impact the
cost of producing automobiles.)
Trade barriers to keep out cheap Japanese goods, Why or why not?
It is often alleged that Japanese producers receive subsidies from their
government permitting them to sell their products at a low price in the
U.S. market. Do you think we should erect trade barriers to keep out
cheap Japanese goods if the source of their low price is governmental
subsidies? Why or why not?
Excess of imports
The U.S. is suffering
from an excess of imports. Cheap foreign products are driving American
firms out of business and leaving the U.S. economy in shambles.”
Evaluate this view.
Imports and export tariffs
Tariffs not only reduce
the volume of imports, they also reduce the volume of exports.” Is this
statement true or false? Explain your answer.
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