A country simultaneously raises tariffs on manufactured goods and overvalues the exchange rate. Why might these seemingly contradictory policies be pursued together?
What will be an ideal response?
Students should show they understand why a general import substitution strategy could include making some imports cheaper while effectively prohibiting others. You may wish to combine this question with the following question.
Economics
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A firm's total product curve shows that at first it has
A) economies of scale and then diseconomies of scale. B) diseconomies of scale and then economies of scale. C) increasing marginal returns and then diminishing marginal returns. D) diminishing marginal returns and then increasing marginal returns.
Economics
If tax rates were 100 percent, tax revenues would be _____
a. maximized b. minimized c. indeterminate d. the same if they were 50 percent
Economics