ECN 211 Exam 2 – Marburger questions with correct answers|100% verified|18 pages

ECN 211 Exam 2 – Marburger questions with correct answers Tariff Correct Answer-A tax on imported goods Who benefits/loses from free trade? Correct Answer-1. Foreign producers of steel (exports steel to US) 2. Buyers of steel and steel-related products (price falls and quantity increases) Who is worse off because of free trade? 1. Domestic producer of steel (sells lower quantity and at a lower price) Who benefits from tariffs? (US steel producers example) Correct Answer-1. Domestic producers of steel (sells more at a higher price) Who is worse off because of the tariff? 1. Foreign producers of steel (sells lower quantity) 2. Domestic producers of goods that use steel 3. Buyers of steel- and steel-related products Tariff Bottom Lime Correct Answer-Trade restrictions benefits the protected domestic industry to the detriment of buyers of goods that use those products Gross Domestic Product (GDP) Correct Answer-The market value of all final goods and services produced within a country in a given period of time How to calculate GDP Correct Answer-GDP = Consumption + Investment + Government + Exports - Imports GDP = C + I + G + (X - M) (X- M) is referred to as net exports Nominal GDP Correct Answer-Nominal GDP measures current output sold at current prices We cannot compare nominal GDP between time periods because differences may reflect inflation and not changes in production Real GDP Correct Answer-Real GDP measures current output sold at constant prices What would the GDP be if prices hadn't changed? Because real GDP assumes constant prices, we can use it to compare GDP across time periods GDP Deflator Correct Answer-The GDP Deflator is a price index It allows us to measure price changes across periods