698PART ELEVENTHE MACROECONOMICS OF OPEN ECONOMIESc.Is the claim in the popular press consistent with themodel in this chapter? Does a decline in the qualityof U.S. products have any effect on our standard ofliving? (Hint: When we sell our goods to foreigners,what do we receive in return?)5.An economist discussing trade policy in The NewRepublicwrote: “One of the benefits of the United Statesremoving its trade restrictions [is] the gain to U.S.industries that produce goods for export. Exportindustries would find it easier to sell their goodsabroad—even if other countries didn’t follow ourexample and reduce their trade barriers.” Explain inwords why U.S. exportindustries would benefit from areduction in restrictions on importsto the United States.6.Suppose the French suddenly develop a strong taste forCalifornia wines. Answer the following questions inwords and using a diagram.
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