You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. agricultural industry is concerned about the level of fruit and vegetable imports to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. (?) Supply O Demand Supply Demand HANGE RATE (Units of foreign currency per dollar)
You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. agricultural industry is concerned about the level of fruit and vegetable imports to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim. The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market. Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff. (?) Supply O Demand Supply Demand HANGE RATE (Units of foreign currency per dollar)
Chapter1: Making Economics Decisions
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Transcribed Image Text:**Homework (Ch 19)**
You have just been hired by the U.S. government to analyze the following scenario. Suppose the U.S. agricultural industry is concerned about the level of fruit and vegetable imports to the United States, a practice that hurts domestic producers. Lobbyists claim that implementing a tariff on imports would shrink the size of the trade deficit. The following exercise will help you to analyze this claim.
The following graph shows the demand and supply of U.S. dollars in a model of the foreign-currency exchange market.
**Task:** Shift the demand curve, the supply curve, or both to show what would happen if the government decided to implement the tariff.
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**Graph Explanation:**
- **Axes:** The vertical axis represents the exchange rate (units of foreign currency per dollar), while the horizontal axis represents the quantity.
- **Curves:**
- **Demand Curve:** This downward-sloping line indicates the relationship between the exchange rate and the quantity of dollars demanded.
- **Supply Curve:** This upward-sloping line indicates the relationship between the exchange rate and the quantity of dollars supplied.
- **Adjustable Controls:** Two sliders allow the user to adjust the position of the demand and supply curves, depicting the impact of a tariff on exchange rates.
This exercise encourages exploring how tariffs might influence currency markets by altering demand and/or supply conditions.
![**Homework (Ch 19)**
The image is a screenshot from an educational platform showing a chart and interactive exercise related to exchange rates and tariffs.
**Graph Explanation:**
The graph displayed represents the real exchange rate with "Quantity of Dollars" on the x-axis and "Real Exchange Rate (Units of foreign currency per dollar)" on the y-axis. The graph includes two lines:
- A downward-sloping "Demand" line indicating the demand for dollars.
- A vertical line labeled "Supply," representing a fixed quantity of dollars.
**Exercise Instructions:**
1. **Given this change, the dollar [dropdown selection].**
- A dropdown menu allows the selection of how the change affects the dollar (e.g., appreciates, depreciates).
2. **Fill in the following table with the effect of a tariff on the following items:**
| | Demand for Loanable Funds | Real Interest Rate | National Saving | Net Exports |
|-------------------------|---------------------------|---------------------|------------------------------|-------------|
| Change due to a tariff | [Dropdown] | [Dropdown] | [Dropdown] | [Dropdown] |
- Each field under the headings is also a dropdown menu, where users can select how a tariff affects each item, affecting economics variables like demand for loanable funds, real interest rates, national saving, and net exports.
**Action Buttons:**
- "Grade It Now" button to submit responses for grading.
- "Save & Continue" button to save progress and continue later.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcce2ce2a-239c-4b34-af9b-66c575d1fbea%2Fb803037c-bce6-4ff7-9ece-e4853a76e3a5%2Febaax2g_processed.png&w=3840&q=75)
Transcribed Image Text:**Homework (Ch 19)**
The image is a screenshot from an educational platform showing a chart and interactive exercise related to exchange rates and tariffs.
**Graph Explanation:**
The graph displayed represents the real exchange rate with "Quantity of Dollars" on the x-axis and "Real Exchange Rate (Units of foreign currency per dollar)" on the y-axis. The graph includes two lines:
- A downward-sloping "Demand" line indicating the demand for dollars.
- A vertical line labeled "Supply," representing a fixed quantity of dollars.
**Exercise Instructions:**
1. **Given this change, the dollar [dropdown selection].**
- A dropdown menu allows the selection of how the change affects the dollar (e.g., appreciates, depreciates).
2. **Fill in the following table with the effect of a tariff on the following items:**
| | Demand for Loanable Funds | Real Interest Rate | National Saving | Net Exports |
|-------------------------|---------------------------|---------------------|------------------------------|-------------|
| Change due to a tariff | [Dropdown] | [Dropdown] | [Dropdown] | [Dropdown] |
- Each field under the headings is also a dropdown menu, where users can select how a tariff affects each item, affecting economics variables like demand for loanable funds, real interest rates, national saving, and net exports.
**Action Buttons:**
- "Grade It Now" button to submit responses for grading.
- "Save & Continue" button to save progress and continue later.
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