Explain how the “Buy American” theme hurts Americans.
What will be an ideal response?
The idea behind “Buy American” goes against the basic economic principle of comparative advantage. Societies are better off if they all produce what they are best at and trade with others. Based on “Buy American,” we would consume only what we were capable of producing; resulting in less wealth and fewer choices.
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Figure 4.4 illustrates the supply of tacos. An increase in the price of ground beef, which is used to make tacos, would most likely cause a movement from
A) point a to point b. B) point c to point b. C) S2 to S1. D) S0 to S1.
For a perfectly competitive firm, price is the same as
A) marginal revenue. B) average variable cost. C) total revenue. D) Both answers A and B are correct.
The price of a computer in the United States is $1,000. The price of a car in Germany is 10,000 euros. The current exchange rate is 0.9 euros per dollar
a) If a computer is exported from the United States to Germany with no barriers to trade, what will be the price of the computer in Germany? b) If a car is imported to the United States from Germany with no barriers to trade, what will be the price of the car in the United States? c) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a computer exported from the United States change in Germany? d) Suppose the dollar appreciates by 10 percent against the euro. How will the price of a car imported to the United States from Germany change in the United States?
Friedman and Schwarz argue that money is not neutral because
A) theoretical models of the economy don't show monetary neutrality. B) money is a leading, procyclical variable. C) they found several historical incidents in which changes in the money supply were not responses to macroeconomic conditions, and output moved in the same direction as money. D) they found no evidence that productivity changes or changes in government spending contributed to business cycles; only monetary changes preceded every recession.