Question

You have just been hired by the u. S. Government to analyze the following scenario. Suppose the u. S. Agricultural industry is concerned about the level of fruit and vegetable imports to the united states, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim.

Answer 1

To analyse this claim there has to be a shift in import. Import would go down as the dollar rises.

Why the tariff affects the size of the trade deficit

First of all there is going to be a right or outward shift in the exchange rate demand for the American dollars.

Therefore the value of the dollar is going to be on the rise. import is going to fall and there would be a rise in net export.

The outward shift of the demand curve would lead to a fall in exports based on the shifts in the exchange rate.

Read more on the demand curve here: brainly.com/question/516635