Bu204 Unit 2

Topics: Free trade, International trade, Wage Pages: 2 (779 words) Published: October 1, 2012
BU204-01 Macroeconomics
Unit 2

Questions:
1. A representative of the American clothing industry recently made the following statement: “Workers in Asia often work in sweatshop conditions earning only pennies an hour. American workers are more productive and as a result earn higher wages. In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing.” Answer the following: (10 points) a. Which parts of this quote are positive statements? Which parts are normative statements? b. Would such a policy make some Americans better off without making any other Americans worse off? Explain who and why. c. Would low-wage Asian workers benefit from or be hurt by such a policy and why? 1a. The positive quotes of this statement are that “workers in Asia often work in sweatshops and earn only pennies and hour and American workers are more productive and as a result earn a higher wage. The normative statement of this quote is that “In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing” 1b. Although such a policy may increase jobs for the American workplace making it better off for certain geographical areas, it may make it worse off for the people who can’t afford the higher priced clothing due to the cost of the production of the clothing cause of the higher priced labor. Upper class families may have no issue to the adjustment, but the lower class families may have a hard time purchasing the clothing. 1c. In my opinion the low wage Asian workers would initially take a hit in the clothing business due to lack of production but where there are so many different products produced in the Asian market they would surely find another job producing another product. 2. Referring to the same situation in question 1, but instead of legislation banning the imports, assume that the government enacts a...
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