It is argued that a tariff may help promote employment in a single industry, but is not likely to help employment in general. Discuss
What will be an ideal response?
A general tariff on all imports is equivalent to a depreciation in the value of the country's currency. It would raise the prices of all imports, and have a considerable income effect. This income effect will have a negative effect on total consumption of the import-competing sector (as well as the exportables and non-tradables). In addition, under conditions of a flexible exchange rate regime (assuming the Marshal-Lerner Conditions hold) it will lower the supply of the country's currency in the foreign exchange market, and hence cause an appreciation of the currency. This will harm the country's exports, and negatively affect this sector's employment.
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To encourage more investment, Mexico has lowered its tax rates to reduce the user cost of capital. Argentina is unable to pay back its foreign debts, causing its expected future marginal product of capital to fall
Mexico's real exchange rate will ________ and its net exports will ________. A) depreciate; fall B) appreciate; rise C) depreciate; rise D) appreciate; fall
Colonialists tried to attract precious metals and coins by raising or attempting to raise the colonial price of the foreign money. This is called devaluation
Indicate whether the statement is true or false
A payoff matrix
A) shows the payoffs (i.e. bribes) required to government officials for firms undertaking specific actions. B) details the actions each firm takes. C) shows the payoffs to each firm for each possible outcome. D) is optional in game theory.
Why can't two firms in a Prisoners' Dilemma enforce a better outcome that has higher payoffs?
A) Under an outcome with higher payoffs, the outcome is not a Nash equilibrium and each firm has an incentive to change their actions. B) Barriers to entry C) Barriers to exit D) The Nash equilibrium in a Prisoners' Dilemma has the highest possible payoffs for both firms.