QUESTION 1 The most important lesson from trade policy is that if the U\'S wishe

Question

QUESTION 1 The most important lesson from trade policy is that if the U'S wishes to decline trade deficit and increase domestic jobs by imposing import quota on foreign o a trade deficit would be reduced, and while the jobs in the exporting firms can be saved, jobs in domestic firms in the U'S will be destroyed O b trade deficit would not be reduced, but jobs in both domestic and exporting firms can be saved O C. trade deficit would be reduced, but jobs in both domestic and exporting firms will be destroyed ·trade deficit would not be reduced, and while the domestic jobs can be saved, Jobs in exporting firms in the US w 11 be destroyed. products,

Explanation / Answer

1. C. Trade Deficit = Import - Export - Import quota will decrease imports and hence, trade deficit will decrease. This will affect employment of the people associated with this product. Exporting firm will export less and therefore produce less and employ less people. While in US, retailers who used to buy and sell this product will also go out of market.

3. b. Tariff is the tax or duty paid on a certain class of imports or exports.

4. a. Capital flight causes the supply of foreign currency to decrease in the domestic foreign exchange market. It will reduce money available for domestic investment and hence currency depreciation.

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