If the country's own domestic product price level rises then the consumer will buy cheaper-priced foreign goods because in an market everyone wants good quality goods in cheaper price as the law of demands states that if the price of product rises its demand falls and vice versa. So in this condition if the consumers are getting foreign goods cheaper in comparison to domestic goods they will go for foreign goods only. The other option which are given will not be applicable because consumer will never go to government or any other person. There reaction is enough, when the government will see that the consumer are buying more foreign goods then the government will take step by their own to increase the sale of domestic products.
In an open economy with international trade, when the country's own (domestic) price level rises, how...
if international trade is open with no restrictions, how many bushels of wheat will be imported. if the government wants to reduce imports to exactly 120 bushels of wheat to help domestic consumers, what tarriff per bushels will achieve this? How much revenue for the government will result from a tariff of this level? Domestic Demand Domestic Supply 485 460 435 410 385 360 335 310 Y-Intercept: 260 285 260 235 0 30 60 90 120 150 180 210 240...
w a s Chapter 62006%20Trade%20Exercises%20Winter%202020%20Exercise%20-%201CM.pdf Open Economy (International Trade) The domestic Maize Market for a small closed economy of country XYZ is shown in the model below, and world price is $10/ton. Suppose the government of country XYZ decides to add tariff ($4/ton of import maize) to reduce imports. The model is shown below: Maize Market with Tariff S(domestic) Price/ton Domestic Price (with tariff) -- World Price Ddomestic) 32 35 4 5 25 30 18 20 22 Quantity of tons...
20. When a country's exchange rate depreciates, the price of: A: that country's goods abroad decreases B: that country's goods abroad increases C: foreign goods sold in the country increases D: that country's goods produced and sold locally increases 21. A central bank may seek to influence its country's currency by: A: imposing limits on the number of goods that may be imported B: restricting the outflow of funds from the home country C: intervening directly in the FX market...
Unfair Trade A global recession has hit and you are the economic advisor to a country with a struggling economy and rising unemployment. Your country has a long history of trading with different nations, but due to the recession, labor and business groups are becoming ever more rabid in their pleas for the government to strengthen and enforce trade restrictions. The labor groups argue that too many businesses are trying to cut costs by replacing domestic workers with cheaper foreign...
6. The balance of payments is ..-(A) negative when the nation runs a trade deficit. (B) positive when the nation runs a trade surplus. (C) negative when the country is a borrower in the international apital market. (D) positive when the country is a lender in the international capital market. (E) always equal to zero. 7. If the U.S. dollar increases in value relative to the British pound, (A) U.S. wheat will become cheaper in England. (3) British bicycles will...
(1) If the world price is above the domestic equilibrium price, the domestic country is likely to ____________________ the good. (2) The difference between what an economy sells to and buys from foreigners is _________________. (3) The idea that exchange rates and prices adjust to equalize the cost of living across international boundaries is called __________________________. (4) In the graph below, when the world price is $3, how many units are...
Using what you know about supply and demand, what would happen to the equilibrium price and quantity of any domestic goods if you shut the borders to all foreign products? What would happen to the cost of production for businesses if you required them to only hire domestic workers and only use domestic capital? What would happen to the prices consumers faced? What would happen to the demand for your country’s exports in the rest of the world if you...
please answer all the questions correctly Suppose that the world price of oats is 30 cents a kilogram. Canada does not trade internationally, and the equilibrium price of oats in Canada is 40 cents a kilogram. Canada then begins to trade internationally. The price of oats in Canada Canadian consumers buy oats. Canadian firms produce oats. Canada _oats. Select one: a. rises/more/less /exports b. falls / less/more/imports c. falls/more/less / exports O d. rises / less/more/exports e falls / more...
1) The price of one currency in terms of another is called A) the exchange rate. B) purchasing power parity. C) the terms of trade. D) a currency band. 2) The three policies which cannot be maintained simultaneously by a nation (sometimes referred to as the "trilemma") do NOT include A) independent control of the money supply. B) independent control of fiscal policy. C) free flow of capital. D) fixed exchange rates 3) The foreign exchange rate refers to A) the rate of change in...
Are federal budget deficits related to trade deficits? A. Yes, but only if the quality of U.S. goods and services is deteriorating B. No. The budget deficit is entirely a domestic matter, while the trade deficit only affects U.S. citizens who travel abroad. C. Yes. Higher deficit spending goes up results in more government borrowing, and foreign residents who lend funds to the U.S. government have fewer resources to spend U.S. export goods. D. Yes. If U.S. consumers buy too...