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Macroeconomics - Protectionist Policies

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Do protectionist policies benefit producers, consumers, workers, or the government? Explain. Also please explain how the "Buy American" theme hurts Americans.

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Protectionist policies in the short run benefit producers and their workers. The manufacturers in the short run gain because competition is blocked out. Foreign goods cannot sell, so producers gain in the short run. The workers also gain because they do not lose their jobs. In the short run the government receives taxes from the manufacturers and their employees, these taxes are protected by protectionist policies. Protectionist policies in general do not benefit the consumers. The consumers have to pay higher prices for goods that may not be of quality equal to international standards.
There is a general agreement that protectionism is harmful because the costs are more than the benefits and it harms economic growth. The economist uses the concept of comparative advantage to show that the losses from protectionism outweigh the gains from protectionism. In the long ...

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The answer to this problem explains the effects of Buy American theme. The references related to the answer are also included.

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Q.1) If you were the finance Minister of Never-Never Land, how would you estimate the long-run exchange rate of your currency? Defend your choice as well as discuss its possible failings.

Q.2) What are the positives and negatives of protectionist trade policies on the part of the federal government? Which policy do you think is best right now?

Q.3) How do changes in interest rates, inflation, productivity, and income affect exchange rates? Is a strong U.S. dollar always good for the U.S. and global economies? Why or why not?

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