What is MFN status? How does the WTO reconcile the principle of equal treatment with the preferential treatment created by regional trade agreements?
What will be an ideal response?
MFN status is basically that you will treat all nations participating in the agreement the same. A regional trade agreement creates preferential treatment for nations that are participants. (For example, because of NAFTA, Mexico and Canada get more preferential terms with the United States than other WTO members would.) The WTO recognizes that regional agreements destroy some opportunities for trade (by making nonmembers face higher barriers than members), but believes they create more trade between participants than they destroy. The regional agreements also allow nations to try out new arrangements that may later be adopted more broadly.
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A constitutional amendment is passed that requires the government to have an annually balanced budget in the sense that changes in spending should be matched by equivalent changes in taxes. Should the government desire to increase real GDP by $25 billion and meet the provisions of the law, itÂ
A. could increase spending by $25 billion and reduce taxes by $25 billion. B. cannot possibly reach its objective without breaking the law. C. could increase spending by $30 billion and increase taxes by $25 billion. D. could increase spending by $25 billion and increase taxes by $25 billion.
If nominal GDP is $10 trillion, and the money supply is $2 trillion, velocity is
A) 0.2. B) 5. C) 10. D) 20.
If the supply curve is perfectly inelastic, _____
a. any tax will be entirely born by suppliers b. any tax will be entirely born by demanders c. any tax will be split by demanders and suppliers d. the tax incidence depends upon the elasticity of the demand curve
The expenditure multiplier
a) is defined as the inverse of the savings rate b) is greater than zero but less than one c) does not depend on consumption behavior d) is larger in a country with a large MPC than in a country with a small MPC e) determines the effect on consumption from an increase in disposable income