Carefully explain how the imposition of a tariff is different for a large country (that can affect the world price) than a small country

What will be an ideal response?

For a small country, imposition of a tariff unambiguously reduces total benefits to the country. For a large country, the effect is less clear. Since a large country can have an impact on the world price, the reduction in domestic demand due to the tariff may be sufficiently large to cause the world price to fall or to encourage foreign producers to reduce their prices to avoid losing market share. In this case, while domestic producers still gain and domestic consumers still lose, the overall benefits to the country may or may not fall. If the fall in the world price is sufficient, foreign producers are essentially paying for much of the tariff in the form of lower prices, and this gain may exceed the deadweight losses.

Economics

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Everything else equal, if the dollar depreciates against the peso:

A) U.S. exports and imports will both decrease. B) the U.S. will import more and export less. C) U.S. exports and imports will both increase. D) the U.S. will export more and import less.

Economics

Let M = money supply; P = price level; V = velocity; Y = real GDP. The equation of exchange is given by

A) M x V=nominalGDP. B) M x Y=P x V. C) M x P=V x Y. D) M x V=(1/V)P x Y.

Economics