In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt. During the day of this announcement, U.S. interest rates rose and the real exchange rate of the U.S. dollar depreciated. Which of these changes is consistent with the results of the open-economy macroeconomic model?
a. the increase in U.S. interest rates
b. the depreciation of the real exchange rate of the U.S. dollar
c. Both a and b are consistent.
d. Neither a nor b are consistent.
c
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What's another term for "positive externality"?
A) Negative externality B) Spillover cost C) Spillover benefit D) The "pay-as-you-go" principle
In the figure above, with international trade ________ helicopters per year are produced in the United States
A) 360 B) 480 C) 720 D) 240
Many service-sector jobs in the United States have moved to other countries where these jobs are done at a fraction of the cost. The outsourcing of jobs overseas is heavily debated by politicians, policy makers, and economists in the United States
Based on your understanding of trade and the benefits and losses from trade, how do you think outsourcing affects social surplus in the domestic economy?
One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify
Which of the following is a second reason? A) Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. B) The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. C) The benefits from free trade are less than the costs. D) People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote.