1. David Friedman said that free (international) trade is a technology. Explain

Question

1. David Friedman said that free (international) trade is a technology. Explain what he means.

2. Will globalization lead to some people losing jobs?

3. How do tariff rates in the United States today compare with 1946?

4. Assume a two-country world where the two countries are the United States and Japan. Note the impact on U.S. Real GDP of each of the following: (a) A fall in the real interest rate in the United States relative to the real interest rate in Japan. (b) An economic expansion in Japan.

5. If Americans buy fewer units of good X, which is produced in Japan, will they necessarily spend less money overall on Good X? Explain your answer.

6. “The discussion of the J-curve points out that economists sometimes think in terms of both the short run and the long run.” Do you agree or disagree? Explain your answer.

7. Explain how a change in the exchange rate can change both the U.S. AD and SRAS curves.

8. Suppose country A undertakes a policy mix of contractionary fiscal policy and expansionary monetary policy. What would you predict would happen to real interest rates, the value of country A’s currency, and net exports? Explain your answer.

9. Explain why expansionary monetary policy is more likely to increase Real GDP in an open economy than in a closed economy.

10. Why might import spending rise in a country soon after a depreciation of its currency? Is import spending likely to fall over time? Explain your answers. 11. Explain why contractionary monetary policy lowers Real GDP more in an open economy than in a closed economy.

Explanation / Answer

Please post different questions separately ... Answer to the first question has been provided ...

1) International trade helps countries to produce the good in which they have a comparative advantage . This helps countries to consume outside their production possibility frontiers . This phenomenon is called gains from trade . If a technological development occurs we know that the PPF shifts outwards causing the feasible consumption area to expand . The same things happens in case of trade . Countries can consume more or consume same bundle at lower opportunity costs by indulging in international trade . Hence , free trade is a technology .

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