Reference no: EM1347524

Referring to the same situation in question 1, but instead of legislation banning the imports, assume that the government enacts a special tax on imported clothing that is so high that the selling price of the imports would be equal to the selling price of the same clothing made in America. This kind of tax is called a tariff and is enacted to protect domestic producers of the same items that can be imported at much lower costs. Answer the following: (10 points)

a. Illustrate what would shoppers see when they shopped in Wal-Mart and the other "big box" stores that sell so many imported items?

b. Would this tax policy have a better effect, worse effect, or no different effect on American workers than the legislation banning the imports discussed in question 1? What kind of effect would the tax have on the Asian workers?

3. A growing economy means that the economy is producing more and more "stuff", either because it has more resources (workers), or uses those resources more productively (smarter, better workers, working with better machines and systems). A growing economy that produces more and more "stuff" normally means that the people have a higher and higher standard of living. If the government adopts a "free trade" policy towards all imports, including the low cost clothing of question 1 and 2, in which it places no barriers to importing items, can that action help the economy to grow? Explain your answer.