Int trade

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Int trade

  1. 1. 1. What is China’s GDP per capita? Population 1.3 billion (same as .0013 trillion) GDP in $$: 6 trillion 2. Does that make China a rich or poor country compared to the US? (GDP/capita: $48,000) 3. What part of the GDP formula might make politicians want to restrict trade? 4. Why might that be a bad idea? 5. Where was your shirt made?
  2. 2.  2 producers:  3 groups of consumers  Sellers decide price and give pitch  Buyers decide which tires to buy Save American Jobs Bill 20% tariff on all foreign goods
  3. 3. • Mankiw calls it “open economy” • Free trade = absence of restrictions of goods/services • List 3 winners & 3 losers if all countries had free trade • Winners: consumers, middlemen, retailers, poor countries? • Losers: local producers, politicians, rich countries?
  4. 4.  Lower prices for consumers  More competition leading to better products  Job opportunities for producers  Job opportunities in buyer countries  Opportunity costs?
  5. 5. Source: World Bank
  6. 6.  Structural unemployment  Lower union membership  Ethical problems
  7. 7.  Tariffs  Tax on imports  Result: higher price for consumers, job saving  Opportunity cost Example: sugar  Quotas  Limit on imports  Result: high prices, less choice  Examples: Japanese full sized trucks  Lexus, Infinity, etc
  8. 8.  Embargos  Banning imports  Result: less exports for embargoed country  Subsidies  Gov’t help for industries  Result: higher taxes locally, other countries retaliate
  9. 9.  Dumping  Flooding market with subsidized imports  Hope to eliminate competition and raise price  Not much LR evidence
  10. 10.  If you need to: read Mankiw Ch 29  Page 641, Problems: 1-5,8, 12

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