1. Explain how a tariff reduction causes an increase in the equilibrium quantity of imports and a decrease in the equilibrium price. Hint: Consider the Work It Out "Effects of Trade Barriers."

2. Explain how a subsidy on agricultural goods like sugar adversely affects the income of foreign producers of imported sugar.

3. Explain how trade barriers save jobs in protected industries, but only by costing jobs in other industries.

4. Explain how trade barriers raise wages in protected industries by reducing average wages economy-wide.

5. How does international trade affect working conditions of low-income countries?

6. Do the jobs for workers in low-income countries that involve making products for export to high-income countries typically pay these workers more or less than their next-best alternative?

7. How do trade barriers affect the average income level in an economy?

8. How does the cost of "saving" jobs in protected industries compare to the workers' wages and salaries?

9. Explain how predatory pricing could be a motivation for dumping.

10. Why do low-income countries like Brazil, Egypt, or Vietnam have lower environmental standards than high-income countries like the Germany, Japan, or the United States?

11. Explain the logic behind the "race to the bottom" argument and the likely reason it has not occurred.

12. What are the conditions under which a country may use the unsafe products argument to block imports?

13. Why is the national security argument not convincing?

1. Using the data in Table 19.3, rank the seven regions of the world according to GDP and then according to GDP per capita.

Population (in millions) GDP Per Capita GDP = Population Per Capita GDP (in millions)

East Asia and Pacific 2,006 $5,536 $10,450,032

South Asia 1,671 $1,482 $2,288,812

Sub-Saharan Africa 936.1 $1,657 $1,287,650

Latin America and Caribbean 588 $9,536 $5,339,390

Middle East and North Africa 345.4 $3,456 $1,541,900

Europe and Central Asia 272.2 $7,118 $1,862,384

Table19.3 GDP and Population of Seven Regions of the World

2. What are the drawbacks to analyzing the global economy on a regional basis?

3. Create table that identifies the macroeconomic policies for a high-income country, a middle-income country, and a low-income country.

4. Use the data in the text to contrast the policy prescriptions of the high-income, middle-income, and low-income countries.

5. What are the different policy tools for dealing with cyclical unemploymentr?