Explain what a purchasing power parity adjustment is and why it is necessary. Should it always be used?
What will be an ideal response?
Question 2 - Which of the following is an example of a countervailing duty?
A) A tariff is granted because foreign firms are selling below cost.
B) A temporary tariff is granted to allow for adjustment of the domestic industry.
C) A tariff is granted to an industry because foreign firms are subsidized by their governments.
D) A tariff is granted to an industry because another nation persistently uses unfair trade practices.
Question 3 - Explain the three rules that countries must follow to maintain a gold standard.
What will be an ideal response?
Question 4 - Mercantilists perceived trade as a zero sum game.
Indicate whether the statement is true or false
Question 5 - What type of economic policy did Mexico follow from the end of World War II until the 1980s? Describe the three-stage strategy that supporters of this policy emphasized. What was the outcome of these policies for Mexico's manufacturing sector?
What will be an ideal response?
Question 6 - Predatory dumping occurs when
A) foreign firms sell below cost with the intent to drive firms out of the domestic market.
B) foreign firms sell below cost because the product is perishable.
C) foreign firms sell at a price that is below the price of domestic firms.
D) foreign firms sell at a price that covers the cost of their variable inputs.
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