Questions from General Economics

Q: An economist discussing trade policy in The New Republic wrote: “

An economist discussing trade policy in The New Republic wrote: “One of the benefits of the United States removing its trade restrictions [is] the gain to U.S. industries that produce goods for export...

Q: Suppose the French suddenly develop a strong taste for California wines.

Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and with a diagram. a. What happens to the demand for dollars in the market for foreign...

Q: A senator renounces his past support for protectionism: “The U

A senator renounces his past support for protectionism: “The U.S. trade deficit must be reduced, but import quotas only annoy our trading partners. If we subsidize U.S. exports instead, we can reduce...

Q: Suppose the United States decides to subsidize the export of U.

Suppose the United States decides to subsidize the export of U.S. agricultural products, but it does not increase taxes or decrease any other government spending to offset this expenditure. Using a th...

Q: Because Elaine has a family history of significant medical problems, she

Because Elaine has a family history of significant medical problems, she buys health insurance, whereas her friend Jerry, who has a healthier family, goes without. This is an example of a. moral hazar...

Q: Suppose that real interest rates increase across Europe. Explain how this

Suppose that real interest rates increase across Europe. Explain how this development will affect U.S. net capital outflow. Then explain how it will affect U.S. net exports by using a formula from the...

Q: Suppose that Americans decide to increase their saving. a.

Suppose that Americans decide to increase their saving. a. If the elasticity of U.S. net capital outflow with respect to the real interest rate is very high, will this increase in private saving have...

Q: Japan generally runs a significant trade surplus. Do you think this

Japan generally runs a significant trade surplus. Do you think this is most related to high foreign demand for Japanese goods, low Japanese demand for foreign goods, a high Japanese saving rate relati...

Q: What is capital flight? When a country experiences capital flight,

What is capital flight? When a country experiences capital flight, what is the effect on its interest rate and exchange rate?

Q: Holding other things constant, an increase in a nation’s interest rate

Holding other things constant, an increase in a nation’s interest rate reduces a. national saving and domestic investment. b. national saving and the net capital outflow. c. domestic investment and th...