The U.S. government imposes import quotas on many agricultural products, especially products that receive price supports. Offer an economic explanation for this
What will be an ideal response?
If the price supports generate a price in the United States for a product that is above the price in other countries, producers in other countries would increase production with the intention of selling the units in the United States. But, with price supports, the government must purchase all extra units to maintain the price. With imports from abroad, this would get very expensive. Hence, imports are limited through quotas.
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The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents
A) would; would B) would; would not C) would not; would D) would not; would not
A debtor nation means a nation
A) whose imports exceeds its exports. B) whose current account is less than its capital account. C) who—through its history—has invested less in the rest of the world than other countries have invested in it. D) whose current lending to the rest of the world exceeds its borrowing from the rest of the world.
An increase in government spending may expedite recovery from a recession in the short run, but in the long run this policy may
A) raise interest rates and reduce consumer expenditures on automobiles and new houses. B) make domestic businesses less competitive in international markets as the dollar appreciates in value. C) reduce investment in new capital. D) All of the above are correct.
The exchange rate last month was $1 = 1.15 euros. This month it is $1 = 1.35 euros. We can say that the value of the dollar
A) fell; causing net exports to increase and aggregate demand to rise. B) fell; causing net exports to decrease and aggregate demand to fall. C) increased; causing net exports to decrease and aggregate demand to fall. D) increased; causing net exports to decrease and aggregate demand to rise.