What is an export subsidy? Discuss some of the recent examples where such subsidies were controversial.
What will be an ideal response?
An export subsidy is a government payment to an exporter. By reducing the exporter’s costs, such subsidies permit exporters to lower their selling prices and compete more effectively in world trade. Overt export subsidies are minor in the United States. But some foreign governments use them extensively to assist their domestic industries—a practice that provokes bitter complaints from American manufacturers about “unfair competition.” For example, years of heavy government subsidies helped the European Airbus consortium take a sizable share of the world commercial aircraft market away from U.S. manufacturers like Boeing and McDonnell-Douglas—a trend that has lately reversed.
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In a competitive industry
a. firms sell more if price is above marginal cost b. firms sell more is price is below marginal cost c. firms sell less if price is above marginal cost d. none of the above
With the increasing normalization of relations with China, more and more Chinese goods appear on the U.S. market. Haven't you noticed it? If we buy more from China than China buys from us, then
a. the Chinese currency (the yuan) appreciates and we have an unfavorable balance of trade with China b. the Chinese currency (the yuan) depreciates and we have an unfavorable balance of trade with China c. the Chinese currency (the yuan) appreciates and we have a favorable balance of trade with China d. our balance of payments becomes increasingly negative e. our balance of payments becomes increasingly positive
Which of the following statements about real and nominal interest rates is correct?
a. Real interest rates can be either positive or negative, but nominal interest rates must be positive. b. Real interest rates and nominal interest rates must be positive. c. Real interest rates must be positive, but nominal interest rates can be either positive or negative. d. Real interest rates and nominal interest rates can be either positive or negative.
The M2 measure of money consists of the sum of:
A. currency, checking and savings deposits. B. M1, savings deposits, small time deposits, and money market mutual funds. C. currency, checking and savings deposits, and small time deposits. D. savings deposits, small time deposits, and money market mutual funds.