Scenario 32-3

Concerns raised about the declining U.S. shoe industry and unfair labor practices in foreign shoe factories lead the Congress and President to impose a quota on shoe imports.
-Refer to Scenario 32-3. As a result of the quota, is there initially a surplus or a shortage in the market for foreign-currency exchange? Carefully explain how people's response to this surplus or shortage and the resulting changes in their behavior leads to a new equilibrium exchange rate.

Question

Scenario 32-3
​
Concerns raised about the declining U.S. shoe industry and unfair labor practices in foreign shoe factories lead the Congress and President to impose a quota on shoe imports.
-Refer to Scenario 32-3. As a result of the quota, is there initially a surplus or a shortage in the market for foreign-currency exchange? Carefully explain how people's response to this surplus or shortage and the resulting changes in their behavior leads to a new equilibrium exchange rate.

Quizplus · Accepted Answer

The Answer of Scenario 32-3
​
Concerns raised about the declining U.S. shoe industry and unfair labor practices in foreign shoe factories lead the Congress and President to impose a quota on shoe imports.
-Refer to Scenario 32-3. As a result of the quota, is there initially a surplus or a shortage in the market for foreign-currency exchange? Carefully explain how people's response to this surplus or shortage and the resulting changes in their behavior leads to a new equilibrium exchange rate.

Scenario 32-3 ​

Scenario 32-3