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Unformatted text preview: Econ 171-EEP 151 Alain de Janvry Fall 2007 Melissa Hidrobo & Lourdes Rodriguez Homework #5 Preparing for the final examination Due December 6, 2007 Class #15. Trade 15.1. Using a subsidy (under EOI) can give equal incentives to producers but it is less distortive and more expensive for the state than using a tariff (under ISI). T/F______ and explain why. (Hint: Work your way through the producer-consumer surplus exercise for an import tariff used for ISI in Handout #12, Figure 2. Apply the methodology to a subsidy under EOI, Figure 4 in the handout). Class #16. Real exchange rate 16.1. ISI appreciates the RER and is good for agriculture. T/F______ and explain why. 16.2. If China revalued (appreciated) its currency this would help the US reduce is balance of trade deficit. T/F______ and explain why. Class #17. Aid and targeting 17.1. Extra marginal food transfers allow individuals to allocate their budget between food and other goods such that their utility is always maximized. T/F______ and explain why.such that their utility is always maximized....
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- Fall '07
- DE JANVRY