What is the argument in favor of protectionism based on the exchange rate?
There is an argument in favor of protectionism based on the exchange r...
What is the argument in favor of protectionism based on the exchange rate?
There is an argument in favor of protectionism based on the exchange rate, which states that in the case of a large country that can influence the prices of foreign exports, a tariff reduces the price of imports and therefore generates a benefit in the exchange rate. There is an argument in favor of protectionism based on the exchange rate, which states that the benefits of the exchange rate must be compared with the costs of the tariff, which arise because the tariff distorts incentives for production and consumption. There is an argument in favor of protectionism based on the exchange rate, which states that the optimal tariff is always positive, but lower than the prohibitive tariff that would eliminate all imports.
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