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Q. It can be demonstrated that any protectionist policy, which effectively shifts real resources to import competing sector or industry, will harm export industries or sectors. This may, for example, occur by the strengthening U.S. dollar in the foreign exchange market. Could you propose thus that export industries lobby against protectionism in International Trade Commission proceedings? What of consumer advocates? Show the pros and the problems of such a suggestion.
Answer: In reality this is an interesting idea. It is familiar that the public interest is put on hold as the ITC considers only the squeaky wheels of those allegedly hurt by trade. While "consumers" may possibly too amorphous a group to successfully organize and pursue a political agenda the exporters and consumer advocates may be able to form a counter weight to the import competing industries.
Q. To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation.
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