A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy ou

Question

3 years ago

6

A senator renounces his past support for protectionism: "The U.S. trade deficit must be reduced, but import quotas only annoy ou

r trading partners. If we subsidize U.S. exports instead, we can reduce the deficit by increasing our competitiveness."
Show the effect of an export subsidy on the market for foreign exchange.

The value of dollars in the market for foreign-currency exchange.....falls or rise.... as a result of this export subsidy.

True or False: The export subsidy reduces the trade deficit.

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1 answer:

a_sh-v [17] · Answer 1 · 2022-09-04T11:50:30+03:00

Answer

The answer and procedures of the exercise are attached in a the following image.

Explanation

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.