Free trade may be good for a nation, but not for everyone in the nation. Explain why free trade is controversial and the list the justifications that proponents of trade adjustment assistance offer in support of those policies
What will be an ideal response?
The nation as a whole is better off as long as the gains from the winners exceed the losses from the losers. Restructuring means that some industries are dying and workers and producers have to find other opportunities. This may be difficult for not only those directly involved in the industry, but also for the surrounding communities. Adjustment assistance states that since the nation as a whole benefits from trade, there are newly added resources that can be used for compensation. Second, there is a potential ethical obligation to assist those hurt by economic change. Third, compensation reduces the incentives for those hurt by trade to fight against free trade policies.
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Suppose you had $1000 and were deciding between two investments. One pays 5% a year for two years while the other pays 8% the first year and 2% the second year. Which investment would provide a higher return?
What will be an ideal response?
An increase in autonomous spending leads to higher ________
A) inflation B) output C) real interest rate D) all of the above E) none of the above
If the demand for a good is relatively inelastic, this means that consumer purchases of the good are
a. not very sensitive to the price of the good. b. highly sensitive to the price of the good. c. unrelated to the price of the good. d. unaffected by changes in the income level of consumers.
If the effective rate of protection is greater than the nominal rate of protection, there must be tariffs on intermediate products
Indicate whether the statement is true or false