Economists will often argue that an individual trade barrier designed to help a particular industry will work even though on net it won't help the economy as a whole. Explain what this means
What will be an ideal response?
It's possible that the industry that the trade barriers were designed for will benefit. However, because the trade barrier will inevitably drive costs up to other firms in other industries it is possible that the economy as a whole may not benefit. Also, by restricting trade in one industry a nation is also reducing the income creating potential of its trading partners which will reduce its own ability to export goods and services as well.
You might also like to view...
Production points inside the production possibilities frontier
A) are unattainable. B) are attainable only with the full utilization of all resources. C) are associated with unused or misallocated resources. D) result in more rapid growth.
Which of the following statements is true?
A) Advancements in statistical methods and data collection have made it possible for the Fed to closely link the changes in the rate of growth in M1 and M2 with changes in the rate of growth of GDP . B) The introduction of new financial products and changes in the ways people pay for transactions have blurred the distinction between M1 and M2 so that the Fed no longer has reliable estimates of the money demand curve. C) With the proliferation of new financial products, the close relationship between M1 growth and output growth has been further strengthened. D) Unlike the demand for M1, the demand for the much broader M2 money aggregate is unaffected by the financial innovation in interest bearing checking deposits.