If anybody can help me, here are a couple of questions. Short answers, these are
ID: 1211985 • Letter: I
Question
If anybody can help me, here are a couple of questions. Short answers, these are practice questions for my exam and I need to figure them out, thank you!
1. Suppose the US implements a trade policy that produces an increase in imports.
a) What special-interest groups in the US will most likely gain from the increased imports?
b) What special-interest groups in the US will most likely lose from the increased imports?
(Special interest groups include consumers; various industries; e.g. the domestic auto and computer industries; workers in different industries, e.g. steel workers and textile workers; and groups representing social causes like environmentalists and those supporting reform of working conditions.)
2. a) How would each individual’s standard of living be affected if each individual decided to be completely economically self-reliant?
b) How would a nation’s standard of living be affected if each nation decided to be completely economically self-reliant?
3. a) Name some goods or services that are traded internationally.
b) Name some goods or services that are not traded internationally.
c) What are some differences between goods and services that are traded and goods and services that are not traded?
4. According to Section 1.6 of the Salvatore text, what are some current international economic problems and challenges?
Explanation / Answer
1. a) US consumers will benefit from the imports because due to imports they get variety of goods.
b) US producers will loose from the imports because it decreases the demand of domestic goods in the market.
2. a) Individual's standard of living will become not soo good or better because a person is not able to produce all the good which he require to live a life. Some individuals have comparative advantage in production of a certain good which can benefit the whole society if they trade with each other rather than becoming economically self reliant.
b) Nation's standard of living will not improve if each nation decided to be completely economically self-reliant because if there were no imports and exports in the economy then, no producers try to use efficient technology to produce goods at lower prices as compared to foreign competitors and secondly, domestic consumers are not able to consume more variety of goods. If there were no international trade, then economy is not able to transfer goods which are made by countries who have comparative advantage in the production of that good or service. So, without trade there is inefficiency in the production of goods.