Agriculture, clothing, and textiles are singled out for treatment in the chapter because
A) they tend to be the most highly protected sectors of industrial economies.
B) they tend to be the least-protected sectors internationally.
C) the policies of high-income nations in these sectors may have harmful effects in low-income countries.
D) A and C are both correct.
E) B and C are both correct.
D
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What is the government purchases multiplier if the tax rate is 0.2 and the marginal propensity to consume is 0.8? Assume the economy is closed
A) 2.78 B) 5 C) 6.25 D) 100
Under a fixed exchange rate system, if the real interest rate is at its lower bound and the central bank implements expansionary policy, real GDP will ________ and the output gap will ________
A) increase; increase B) decrease; decrease C) increase; decrease D) not change; not change