Explain how potential gains from further reductions in tariff ...

[mmm]

Explain how potential gains from further reductions in tariff levels are different from the gains of the past.
 
  What will be an ideal response?

Question 2

Which of the following would NOT be a cause for an increased American demand for the Mexican peso?
 
  A) The United States having lower interest rates than Mexico
  B) Increased American demand for Mexican goods
  C) The expectation by speculators that the value of the peso is edging up
  D) Greater economic growth in the United States

[vish98]

Answer to Question 1

It is likely that tariff cuts have diminishing marginal returns, so that each successive round of cuts leads to a smaller gain than the cuts before, and thus it is reasonable to guess that future cuts are not likely to have a large impact on world trade and income. While it is difficult to measure the gains from tariff reduction precisely, the value of the Doha Round of trade negotiations were estimated to be in the range of 0.1 percent to 0.5 percent of world GDP. This is certainly far smaller than the gains that relatively closed economies experienced when they opened their markets to trade.

Answer to Question 2

D

[mmm]

Correct answers!

[vish98]

Great! Please up vote