Some people assert that protection from foreign competition prevents rich countries from exploiting developing countries. What is this argument in more detail and what is its flaw?
What will be an ideal response?
The argument claims that rich nations will exploit poor nations by importing goods from the poor nations and that the workers in the poor nations are paid slave wages to produce these goods. This argument has a truly fatal flaw. Free trade increases the demand for the goods produced by workers in developing countries. Thus in order to produce more of these goods, the firms must hire more workers. Hence the demand for the labor used to produce the goods increases, which means that the wage rates paid the workers in the developing countries rises. Thus rather than exploiting the workers in the poor nations, free international trade is one of their few hopes for better lives!
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In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
A) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. B) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods produced in the market place and then adds them up. D) simply counts the total number of goods and services produced in the marketplace and then adds them up.
The euro, a common currency for most of the nations of Western Europe, was introduced
A) before 1900. B) before 1990. C) before 2000. D) in order to snub the pride of the U.S. E) in order to fix currencies in terms of the U.S dollar.
Suppose the demand for Pepsi-Cola is qp = 54 – 2pp + 1pc. The demand for Coca-Cola is qc = 54 - 2pc + 1pp. Each firm faces a constant marginal cost of zero. Determine the Bertrand equilibrium prices
What happens to the Bertrand equilibrium prices and profits if increased differentiation causes the demand for Pepsi-Cola to become qp = 104 - 2pp + 1pc while the demand for Coca-Cola remains unchanged?
In order to achieve an unemployment rate below the natural rate of unemployment, the Fed must pursue a policy of low monetary growth during a time when the public expects high inflation
a. True b. False Indicate whether the statement is true or false