Tariffs policy encourages the American consumers to buy American products by making imported goods more expensive, especially goods from China. The Biden administration has not indicated that it plans to lower the hefty tariffs that Mr. Trump placed on Chinese goods. Using appropriate diagrams for the loanable funds market, the net foreign investment, and the market for foreign currency exchange in the United States (US), critically analyse: (a) How does this trade policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance in the US?

Tariffs policy encourages the American consumers to buy American products by making imported goods more expensive, especially goods from China. The Biden administration has not indicated that it plans to lower the hefty tariffs that Mr. Trump placed on Chinese goods. Using appropriate diagrams for the loanable funds market, the net foreign investment, and the market for foreign currency exchange in the United States (US), critically analyse: (a) How does this trade policy affect national saving, domestic investment, net capital outflow, the interest rate, the exchange rate, and the trade balance in the US?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 1QR

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