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Import substitution strategy is the strategy which is used to reduce the dependence on the on the developed countries. The main goal of this strategy is to strengthen, protect, and grow the local industries.
Trade deficit is when the imports of a nation exceeds the exports, that is when a nation imports is more than its exports the it will lead to trade deficit.
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- Which of the following tends to increase trade between countries?a) Larger gross domestic product.b) Linguistic affinity.c) Well-controlled borders between countries.d) Cultural affinity.e) Strict financial market regulationWill nations that are more involved in foreign trade tend to have higher trade imbalances, lower trade imbalances, or is the pattern unpredictable?How does trade intensity, trade complementary index, and revealed comparative advantage assist countries in making trade decisions?
- Why do larger countries typically have smaller export markets (as a percentage of total production) than smaller countries?That a rich country like Germany has such a small ratio of imports to GDP as compared to Belgium is the evidence of geography. Please explainTrue or false question below. A country's level of trade is measured by exports as a percentage of GDP.
- The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?Review absolute and comparative advantages. Personal private property protection allows for greater entrepreneurial ventures, and thus an expanding economy and job growth; can import tariffs and quotas reduce the benefits of trade?Who loses when a country imports cheaper goods from abroad?
- In a small open economy, the government decides to remove all trade barriers, transitioning from a protectionist stance to a completely free trade policy. Consider the Heckscher - Ohlin model in this context. A) How is this policy shift likely to affect the country's production and consumption patterns in the short term? B) What would be the expected impact on the distribution of income between the owners of the country's abundant and scarce factors of production? C) Discuss the potential long - term dynamic effects on the economy's growth and development. D) If the economy has a comparative advantage in labor - intensive goods, what kind of structural changes might you anticipate in the domestic industries as a result of this policy shift?“Trade policies determine the size of markets for the output of firms and hence strongly influence both foreign and domestic investment. Over time, the influence of trade policies on the investment climate is growing.”What happened to K/L ratio in this country and what are the effects of the new K/L ratio on its production pattern and trade volume. Explain