I need help for my ECON homework

Week 7 assignment answers

1. Goods, services

2. Uneven, different, more

3. Comparative advantage, more, higher

4. Tariffs, quotas, revenue, protective

5. Domestic producers, decrease, less

6. Advanced, developing

7. B ****

8. A

9. A

10. C

11. C

12. A

13. C

14. C

15. Will not, will not

16. Surplus, 200, exports, 200

17. Shortage, 200, imports, 200

18. The imposition of a quota on an imported product has the same direct and indirect effects as a tariff has on that product, with the exception that a tariff generates revenue for government use whereas an import quota transfers that revenue to foreign producers.

19. Domestic, foreign, credit, debit, -, +

20. Less, greater, less

21. Plus, positive, negative

22. Depreciate, appreciate, ,decrease, increase, decrease

23. Taxing, subsidizing, import, export, government

24. B

25. B

26. B

27. A

28. £1= $4.00 +++++

29. $1= £0.25

30. 300

31. 1200

32. When a nation has a payment deficit, foreign exchange rates will increase, thus making foreign goods and services more expensive and decreasing imports. These events will make a nation’s goods and services less expensive for foreigners to buy, thus increasing exports. With a payment surplus, the exchange rates will increase, thus making foreign goods and services less expensive and increasing imports. This situation makes a nation’s goods and services more expensive for foreigners to buy, thus decreasing exports.

33. Under the system of managed floating exchange rates, exchange rates are allowed to float in the long term to correct balance-of-payments deficits and surpluses, but if necessary there can be short-term interventions by governments to stabilize and manage currencies so they do not cause severe disruptions in international trade and finance. This system can also be known as “almost flexible”.

**** extra help on 7-10

The first thing to do is figure out how much each country would have to give up to produce the alternate good. Starting from the left, Japan would have to give up 8 units of perfume in order to produce the first four computers. As you move to the right, does Japan have to give up fewer, the same, or more units of perfume in order to produce four additional computers? Fewer means there are decreasing opportunity costs, the same means opportunity costs are constant, and more means opportunity costs increase. You can also do this moving from right to left- Japan would have to give up 4 computers in order to produce the first 8 units of perfume. This means that their trade off is 4 computers/8 units of perfume, or (simplified) 1 computer/2 units of perfume.

In order to figure out who should specialize in what, choose one good to consider- computers for instance. Which country has to give up fewer units of perfume in order to produce the same amount of computers? It helps to reduce both trade off situations down to 1 computer/? units of perfume in order to find the answer. Once you decide who will produce only computers and who will produce only perfume, you can decide the terms of trade (answer to #8).

For number 9, you need to first figure out the amounts of perfume and computers produced if Japan and France only produce one good (the one in which they have a comparative advantage). How many total units of perfume and computers will result? Compare this to how many computers and how much perfume will be produced if both countries operate at “C” (add France computers and Japan computers, and add France perfume and Japan perfume). The difference between the “C” numbers and the comparative advantage numbers is your answer.

For number 10, if Japan produces only computers, it produces 20. If it “keeps” 8 and trades the other 12, how many units of perfume can it obtain given the terms of trade (1 computer/3 units of perfume)?

+++++ Extra help on #28-31: This is essentially an equilibrium chart. To find the exchange rate, you need to find the price where quantity supplied and quantity demanded are equal. At any other price, the exchange rate wouldn't balance and you'd have a surplus or shortage (and hypothetically the rates and quantities would adjust over time). The price at equilibrium on the chart is your answer for #28 (1 pound = ? dollars). Your answer for #29 is the reciprocal of that (exactly 1 dollar = ? pounds). Your answer will be a fraction or decimal. For #30, your answer is the equilibrium quantity given on the chart, while your answer for #31 is your answer for #28 multiplied by #30.