It is said that the trade protectionism, e.g., a higher tax rate for imports, is good for countries adopting fixed-exchange-rate systems but bad for countries adopting floating-exchange-rate systems. Yes or no? Explain your answers using the Mundell- Fleming mode

It is said that the trade protectionism, e.g., a higher tax rate for imports, is good for countries adopting fixed-exchange-rate systems but bad for countries adopting floating-exchange-rate systems. Yes or no? Explain your answers using the Mundell- Fleming mode

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter21: International Trade And Finance

Section: Chapter Questions

Problem 10SQ

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It is said that the trade protectionism, e.g., a higher tax rate for imports, is
good for countries adopting fixed-exchange-rate systems but bad for countries adopting
floating-exchange-rate systems. Yes or no? Explain your answers using the Mundell-
Fleming model.

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