a) Within a standard trade model, illustrate the effects of an export subsidy on the terms of trade. b) A tariff on good imposed by the government increases the price of the good to the consumers. Using appropriate graph, show how this price increase result in welfare loss to the consumers.

a) Within a standard trade model, illustrate the effects of an export subsidy on the terms of trade. b) A tariff on good imposed by the government increases the price of the good to the consumers. Using appropriate graph, show how this price increase result in welfare loss to the consumers.

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 8PA

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a) Within a standard trade model, illustrate the effects of an export subsidy on the terms of trade.

b) A tariff on good imposed by the government increases the price of the good to the consumers. Using appropriate graph, show how this price increase result in welfare loss to the consumers.

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