Whoever wins the elections tomorrow, protection is poised for a comeback. Tariffs and non-tariff barriers to trade will rise, increasing the US prices of imported goods. The dollar will appreciate as US demand for foreign currencies to buy foreign goods falls, further increasing US prices of imported goods. Markups on US goods that compete with imports will rise apace.
Discuss the short-run and the medium-run economic consequences of the rise in markup over labor costs, μ, in the US economy. Touch on ALL the macroeconomic relations and variables we have concerned ourselves with to date, e.g., those in Questions I and II of this exam and describe the economy’s movement from short-run to medium-run equilibrium. (25 points)
Running head: THE ELECTIONS 1 The ElectionsStudent NameProfessor NameCourse NameNovember 15, 2016 THE ELECTIONS 2The Elections The multiplier impact, a dollar of government buys can produce…