MACROECONOMICS
Q&A
QUESTION 1: The nation of Pixley has an absolute advantage in everything it produces compared to the
nation of Hooterville. Could these two nations still benefit by trading with each other? Explain
QUESTION 2: Evaluate the following statement: If lower exchange rates increase a nation’s exports, the
government should do everything in its power to ensure that the exchange rate for its currency is as low
as possible.
QUESTION 3: Japan generally runs a significant trade surplus. Do you think this is most related to high
foreign demand for Japanese goods, low Japanese demand for foreign goods, a high Japanese saving
rate relative to Japanese investment, or structural barriers against imports into Japan? Explain your
answer
QUESTION 4: A report wrote: “One of the benefits of Malaysia removing its trade restrictions is the gain
to Malaysian industries that produce goods for export. Export industries would find it easier to sell their
goods abroad—even if other countries didn’t follow our example and reduce their trade barriers.”
Explain in words why Malaysian export industries would benefit from a reduction in restrictions on
imports to Malaysia.
Q&A
QUESTION 1: The nation of Pixley has an absolute advantage in everything it produces compared to the
nation of Hooterville. Could these two nations still benefit by trading with each other? Explain
QUESTION 2: Evaluate the following statement: If lower exchange rates increase a nation’s exports, the
government should do everything in its power to ensure that the exchange rate for its currency is as low
as possible.
QUESTION 3: Japan generally runs a significant trade surplus. Do you think this is most related to high
foreign demand for Japanese goods, low Japanese demand for foreign goods, a high Japanese saving
rate relative to Japanese investment, or structural barriers against imports into Japan? Explain your
answer
QUESTION 4: A report wrote: “One of the benefits of Malaysia removing its trade restrictions is the gain
to Malaysian industries that produce goods for export. Export industries would find it easier to sell their
goods abroad—even if other countries didn’t follow our example and reduce their trade barriers.”
Explain in words why Malaysian export industries would benefit from a reduction in restrictions on
imports to Malaysia.
