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1. What are three problems with trade restrictions? what are three reasons often given in support of trade restrictions? 2. What would happen to the

1. What are three problems with trade restrictions? what are three reasons often given in support of trade restrictions?

2. What would happen to the standard of living in the US if all foreign trade were eliminated.

3. How might a nation's endowment of natural resources, labor, and climate shape the nature of its comparative advantage.

4. Why might foreign producers voluntarily agree to a quota rather than face an imposed tariff.

5. Tariffs reduce the volume of imports. Do tariffs also reduce the volume of exports? Explain your response.

6. Why are current account balance generally mirror image of capital account balance

7. Sometimes official government reserves are singled out in the balance of payments accounts. For example, when china buys US financial assets, this purchase is classified as "official Government reserves." On which side of the balance of payment should such purchases be reflected - the current account or the capital account? explain your logic.

8. what are three factors that might make a capital account surplus grow?

9. Is a trade deficit a sign of economic weakness? why or why not.

10. The rate of inflection in India from 2007 to 2011 was 8% over the same period the inflation rate in the US was 2.7%

a. What is the implication of these inflation rates for the exchange rates between the dollar and the rupee? In particular, does the PPP condition imply a rise or fall in the exchange rate?

b. Is the change in the exchange rate an appreciation or a depreciation of the Dollar? Is it an appreciation or a depreciation of the rupee?

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