A country simultaneously raises tariffs on manufactured goods and overvalues the exchange rate. Why might these seemingly contradictory policies be pursued together?
What will be an ideal response?
Students should show they understand why a general import substitution strategy could include making some imports cheaper while effectively prohibiting others. You may wish to combine this question with the following question.
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Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed below.CustomerReservation Price($/Rental)A22B16C12D8E6F4 Suppose Island Bikes knows that customers whose reservation prices are at least $10 always rent bikes before noon, while those whose reservation prices are below $10 never do so. If Island bikes can charge a different price in the morning and in the afternoon, then in the morning, it will rent out ________ bike(s) and charge ________ per bike.
A. 4; $8 B. 1; $22 C. 2; $16 D. 3; $12
The economist Hernando de Soto extensively studied:
a. the problem of scarcity. b. opportunity costs. c. insecure property rights. d. economic freedom in rich countries. e. the sources of comparative advantage in trade.
_____ are elements of fiscal policy that automatically change in value as national income changes
a. Statistical discrepancies b. Exchange rates c. Budget deficits d. Automatic stabilizers e. Supply-side shocks
What is the expected value of a $100 bet on a flip of a fair coin, where heads pays double and tails pays zero?
What will be an ideal response?