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Q. How could the U.S. government justify its decision to offer a subsidy to a profitable and successful business?
Answer: It could indicate that this $10 million pump-priming expenditure results in a profit of $110 million. If Boeing paid a subsidiary income tax of 20% this would net the government $55 million which is in excess of 5 times the original subsidy thus that the decision may be justified not only in terms of benefit/cost considerations however even in terms of pure budgetary terms.
Q. What are the three types of gains from international transactions between the residents of different countries? Answer: 1. Gains due to comparative benefit and ec
Q. Use the diagram below taken from Figure 4-4 to identify the pre-trade situation for Australia and Sri-Lanka. Where on the K/L axis will you search each of the two countries? W
Q. It is probable that trade based on external scale economies can leave a country worse off than it could have been without trade. Illustrate how this could happen. Answer:
Regulation of International Finance
In this year, the Bank of Canada raised the target for overnight rate consistently and continuously. The rate changes are as follows: Date Target (%)
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Assume that Deborah Electronics expects a delivery of Fujitsu laptops in a month from a Japanese supplier. Each laptop sells at $1000 in a retail market whereas the import cost is
critically examine the effects of tariffs on the level of employment and income distribution.
A good analysis in increasing cost theory with graphical analysis
Q. Use a figure to study the effects of a change in market belief with regard to the fixed exchange rate, in particular assume market participants expect the government to devaluat
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