Author Question: The people who support restricted international trade say that ______. A. protection saves jobs, ... (Read 62 times)

javeds · **on:** Jun 29, 2018

The people who support restricted international trade say that ______.

A. protection saves jobs, in both the U.S. and foreign economies
B. U.S. firms won't be able to compete with low-wage foreign labor if trade is free
C. outsourcing sends jobs abroad, which brings diversification and makes our economy more stable
D. protection is needed to enable U.S. firms to produce the things at which they have a comparative advantage

Question 2

Why does GDP equal aggregate income and also equal aggregate expenditure?

What will be an ideal response?

shoemake · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B This commonly encountered argument is flawed, because U.S. firms can compete when U.S. productivity is high.

Answer to Question 2

GDP equals aggregate income because one way to value production is by the cost of the factors of production employed. The cost of the factors production employedwages, interest, rent, and profitequal aggregate income and therefore aggregate income equals GDP. GDP equals aggregate expenditure because another way to value production is by the price that buyers pay for the production in the market. Aggregate expenditure equals the sum of consumption expenditure, investment, government expenditure, and exports minus imports, which is the total amount spent buying the production in the market. Therefore GDP equals aggregate expenditure.