Explain how potential gains from further reductions in tariff levels are different from the gains of the past
What will be an ideal response?
It is likely that tariff cuts have diminishing marginal returns, so that each successive round of cuts leads to a smaller gain than the cuts before, and thus it is reasonable to guess that future cuts are not likely to have a large impact on world trade and income. While it is difficult to measure the gains from tariff reduction precisely, the value of the Doha Round of trade negotiations were estimated to be in the range of 0.1 percent to 0.5 percent of world GDP. This is certainly far smaller than the gains that relatively closed economies experienced when they opened their markets to trade.
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Demand is unit elastic whenever
a. price elasticity has an absolute value of 1 b. price elasticity has an absolute value greater than 1 c. price elasticity has an absolute value less than 1 d. price elasticity is negative e. consumers always respond to a one-dollar change in price by decreasing their quantity demanded by one unit
Which of the following would shift the investment demand curve rightward?
a. Firms are operating their plants at less than full capacity. b. A decrease in the interest rate. c. A decrease in business taxes. d. All of the above. e. None of the above.