1. There are a handful of significant improvements that were realized when GATT became the WTO. Talk about these improvements and whenever possible include an actual case study that shows the application of the improvement. We talked about in class the one big exception to one of these improvement, nontariff barriers to trade. What the heck is that about? How did this huge exception come about?
2. Compare and contrast the various instruments of trade policy, including tariffs, quotas, VERs, and subsidies. Specifically, discuss the compare the benefits and costs of each tool. Will all the tools results in a net loss for the country that using the particular tool? Please explain. Even though they may all results in a net loss, could any tool be preferred? Please explain why. Could any of these tools results in at least a theoretical net gain? Please explain. Graphs are not required for this question.
3. Home imposes a specific tariff of 0.5 on wheat imports.
a. Determine and graph the effects of the tariff on the following: (1) the price of wheat in each country; (2) the quantity of wheat supplied and demanded in each country; (3) the volume of trade. b. Determine the effect of the tariff on the welfare of each of the following groups: (1) Home import-competing producers; (2) Home consumers; (3) the Home government. c. Show graphically and calculate the terms of trade gain, the efficiency loss, and the total effect on welfare of the tariff. 4. Use your knowledge about trade policy to evaluate each of the following statements: a. “An excellent way to reduce unemployment is to enact tariffs on imported goods” b. “Tariffs have a more negative effect of welfare in large countries than in small countries” c. “Automobile manufacturing jobs are heading to Mexico because wages are so much lower there then they are in the United States. As a results, we should implement tariff on automobiles equal to the difference between the U.S and Mexican wage rates. 5....
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