Suppose that in the absence of trade, the U.S. price for bicycles was higher than the world price for bicycles. Would allowing international trade mean that the United States would import or export bicycles? Who in the United States would benefit and who would lose with a free trade policy, and would the gains be greater than the losses?
The United States would import bicycles as consumers demanded more bicycles at the lower world price. The U.S. price would fall to meet the world price, and U.S. consumers would gain, while U.S. producers would lose. The gains to consumers would, however, outweigh the losses to producers.
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If the quantity of credit supplied in a market exceeds the quantity of credit demanded in the market:
A) the unemployment rate tends to rise. B) the real rate of interest tends to rise. C) the rate of inflation tends to fall. D) the real rate of interest tends to fall.
The above figure shows the U.S. market for flip-flops. With international trade, the United States imports ________ flip-flops
A) 400,000 B) 0 because the United States exports flip-flops C) 700,000 D) 300,000 E) 500,000