Floating rates of exchange have a major problem, which is a. In view of the relationship between exchange rates and interest rates, falling interest rates in the US have two separate effects on auto demand. Specifically, the falling interest rate and the associated price effects from the impact on exchange rates cause people to buy a. more cars, with a higher proportiion being domestic. If the economy is at full employment, a budget deficit will cause a. imports to fall, esports to rise, and the deficit to fall. Consumers receive more consumers' surplus when tariffs do not exist.
Producers receive more producers' surplus when tariffs do exist.
A tariff results in a net loss to society. With a tariff, the gains to the winners are less than the losses to the losers.