1. Apple™ sells 40,000 iPods™ that were produced last year, to new customers. As
ID: 1165164 • Letter: 1
Question
1. Apple™ sells 40,000 iPods™ that were produced last year, to new customers. As a result,
2. Some economists argue that trade restrictions
3. When the international value of the dollar decreases,
1. Apple™ sells 40,000 iPods™ that were produced last year, to new customers. As a result,
GDP will increase for this year. GDP will decrease for this year. the iPods™ will increase GDP for this year and count as inventory for last year. the iPods™ will decrease GDP for this year and count as inventory for last year. last year's GDP was increased by the inventory value of the iPods™, and this year's GDP increases by the retail value of the iPods™ less their inventory value from last year.2. Some economists argue that trade restrictions
are instituted because of powerful lobbyists who demand them. are beneficial for at least one of the countries involved in trading. increase trade between countries. improve productive efficiency. improve allocative efficiency.3. When the international value of the dollar decreases,
Americans pay less for foreign goods. the U.S. trade deficit increases. U.S. imports decrease. Americans would demand more foreign currency. U.S. exports decrease.Explanation / Answer
(1) Option (5)
The iPods were counted as inventory investment in last year's GDP. In current year,
Increase in GDP (due to sale of iPods) = Retail price of iPods - Inventory value of iPods last year
(2) Option (2)
Some economists (protectionism) believe that trade restrictions are good for the importing country, and they cit infant industry argument, job loss argument etc to support protectionism.
(3) Option (3)
Increase in value (appreciation) of US dollar increases US exports and decreases US imports, thus decreasing (increasing) trade deficit (surplus).
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