After a tariff is imposed on imported cars would you

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Unformatted text preview: es has a comparative advantage in the production of computers? After a tariff is imposed on imported cars, would you expect consumers to buy more or fewer imported cars, all other things remaining the same? Explain your answer. If the pound appreciates relative to the U.S. dollar, the dollar must depreciate relative to the pound. Do you agree or disagree? Explain your answer. What do critics of the low-foreign-wages argument for trade restrictions say? If the value of U.S. exports is $103 billion and the value of U.S. imports is $210 million, what does the balance of trade equal? State the national-defense argument for trade restrictions. Describe a culture that would foster economic development. Describe a culture that would hinder economic development. Is a fast-growing population necessarily an obstacle to economic development? Explain your answer. Doing the Math Do the calculations necessary to solve the following problems. 1. If the price of an Irish sweater is €30 and the dollar-euro exchange rate is $1 = €0.70, what does the sweater cost in dollars? 2. If the price of a U.S. car is $20,000 and the dollar-yen exchange rate is $1 = ¥129, what does the car cost in yen? 3. If the United States can produce either 20 units of clothing and 40 units of food or 60 units of clothing and 0 units of food, what is the opportunity cost of producing 1 unit of food? 4. If Brazil can produce either 100 units of clothing and 0 units of food or 30 units of clothing and 50 units of food, what is the opportunity cost of producing 1 unit of clothing? Solving Economic Problems Use your thinking skills and the information you learned in this chapter to find solutions to the following problems. 1. Application. Suppose the United States buys 1 million cars from Japan each year. If the dollar depreciates relative to the yen, will Americans buy more or fewer than 1 million cars from Japan? Explain your answer. 2. Analysis. Suppose that U.S. imports currently equal U.S. exports. Explain how a fall in the value of the dollar in comparison to other currencies can affect the current U.S. balance of trade. 3. Cause and Effect. Over a six-month period you notice that the dollar appreciates in value compared to other currencies and that the U.S. balance of trade goes from zero to $30 billion. You suspect some relationship exists between the change in the value of the dollar and the U.S. balance of trade. Did the change in the balance of trade cause the change in the value of the dollar, or did the change in the value of the dollar cause the change in the balance of trade? Explain your answer. 4. Writing. Suppose the people in Houston buy more goods from the people in Los Angeles than vice versa. This is not “news.” Write a onepage paper that answers this question: Why is a city-to-city trade balance not news but a country-to-country trade balance is? Go to www.emcp.net/economics and choose Economics: New Ways of Thinking, Chapter 15, if you need more help in preparing for the chapter test. Chapter 15 International Trade and Economic Development 427...
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This document was uploaded on 01/16/2014.

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