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Principles of Economics- Mankiw (5th) 676

Principles of Economics- Mankiw (5th) 676 - 698 PA R T E L...

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698 PART ELEVEN THE MACROECONOMICS OF OPEN ECONOMIES c. Is the claim in the popular press consistent with the model in this chapter? Does a decline in the quality of U.S. products have any effect on our standard of living? (Hint: When we sell our goods to foreigners, what do we receive in return?) 5. 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. Export industries would find it easier to sell their goods abroad—even if other countries didn’t follow our example and reduce their trade barriers.” Explain in words why U.S. export industries would benefit from a reduction in restrictions on imports to the United States. 6. Suppose the French suddenly develop a strong taste for California wines. Answer the following questions in words and using a diagram.
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