International Economics Questions
Explore questions in the International Economics category that you can ask Spark.E!
protective tariffs are needed to allow new domestic industries to establish themselves.
With regard to exchange rate determination, the law of one price is a useful theory only when applied to:
An increase in European wealth, all other factors held constant should:
If Europeans increase their demand for American cars, everything else constant, we should observe the following change in the U.S. dollar-euro market:
A country running a current account surplus over many years should see its exchange rate:
An increase in the real interest rate on U.S. bonds, everything else equal, will have the following impact on the foreign exchange market:
If U.S. assets are seen as having greater risk relative to foreign assets in the market for foreign exchange, this should cause the:
If in late 2016 100 U.S. dollars exchanged for 118 euros and in mid-2017 100 U.S. dollars exchanged for 127 euros, then:
If a Japanese Toyota sells for 2,500,000 yen and the nominal exchange rate is 110 yen/$U.S., then the dollar price of the Japanese automobile is:
highly specialized economies are dependent on international markets for their income.
If an American traveling abroad can obtain 115 euros for $100 U.S. the current euro per $ exchange rate is:
value of the next best thing forgone (or sacrificed). Recall this is the same opportunity cost we saw at the beginning of the semester -- it is a very fundamental concept to economics
the price that would prevail in a closed economy that does not engage in international trade.
is implemented to shield domestic producers from foreign competition.
government payment to a domestic producer of export goods and is designed to aid that producer.
tariffs are needed to protect domestic firms from "dumping" by foreign firms. "Dumping" is the sale of a product in a foreign country at prices either below cost or below the prices commonly charges at home. Most nations prohibit dumping.
includes onerous (aka very difficult and cumbersome) licensing requirements, unreasonable standards pertaining to product quality, or simply bureaucratic hurdles and delays in customs procedures.
efficiently produced in countries with an abundance of suitable land
to benefit from specialization and trade. or the ability of a country to produce a good at a lower opportunity cost than another country.
protective tariffs are needed to preserve or strengthen industries that produce materials essential for national defense.