A Sudden Shift from Import Tariffs to Free Trade May

question 53

Multiple Choice

A sudden shift from import tariffs to free trade may induce short-term unemployment in:

• A) Import-competing industries
• B) Industries that are only exporters
• C) Industries that sell domestically as well as export
• D) Industries that neither import nor export

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Definitions:

Maintenance Margin

The minimum amount of equity an investor must maintain in a margin account after the purchase has been made, to keep the position open.

Interest Rate Swaps

Financial derivatives contracts where two parties exchange interest rate payments on a specified principal amount, typically exchanging fixed for floating rates.

Fixed-rate Bonds

Fixed-rate Bonds are bonds that pay the same rate of interest from issue until maturity, regardless of changes in market interest rates.

Floating-rate Bonds

Bonds whose interest rate payments adjust periodically based on an underlying benchmark, making them less sensitive to interest rate changes.