International Trade

Question 1

Benefits/cost of international trade

Answer 1

+: lower cost to consumers of imports
- higher employment, wage, profit exports industry
- economies of sacral reduce costs of export, improve quality
- free trade reduces the pricing power of domestic monopolies

Costs:

• pays avec bcp importations à un moment n’a plus de biens à vendre, donc met employé à la porte, Long terme bénéfice plus important que les
  Coûts

Question 2

Absolute vs comparative advantage

Answer 2

Absolute: lower cost in terms of resources used

Comparative: lower opportunity cost produce. Trade can make all countries better off. Each country specializes in goods they produce most efficiently and trade for other goods

Question 3

Support Trade restrictions

Answer 3

Infant industry: protect new industry form foreign competition

National security: ensure domestics production capability one the event or conflict or disrupted supply chains

Question 4

Doesn’t support trade restrictions

Answer 4

Protecting domestic jobs: some job will be lost other created

Protecting domestic industry: firm use political influence to get protection from foreign competition, consumer pay higher price

Éviter restriction, certains pays vendent < prix marché et fait disparaître marché mondial

Pour sécurité, conserver not produits chez nous/certain niveau de productivité à l’intérieur de notre pays

Question 5

Trade restrictions

Answer 5

Tariff: tax imposed on imported goods

Quota: limtiaiotn on the quantity of goods imported

Export subsidies (subvention): payment by gvt to domestic exporter

Minimum domestic content: requires proportion of product content to be sourced domestically (prod minimal doit être fait dans le pays )

Voluntary export restraint (VER): agreement by one country to limit the quantity of goods it will export to another country (entente pur éviter restrictions officielles)

Question 6

Protectionist policies effects

Import, quotas, tariffs and VER effect on domestic (importing) country

Answer 6

Reduce imports
Increase purse
Decrease consumer surplus
Increase the domestic quantity supply
Increase the producer surplus

• all polices will decrease national welfare sauf quotas et tariffs in large country, where quota et tariffs could reduce the world price

Question 7

Impose restrictions on the flow of financial capital

Answer 7

Outright prohibition of domestic investment but foreigners

Punitive taxation: pour nos propres investisseurs, les empêcher d’aller voir ailleurs

Restrictions: doit réinvestir les bénéfices chez nous, ne peut pas partir

Question 8

Restrictions

Answer 8

Decrease economic welfare

Short term benefit = developing courtiers, reducing volatile capital inflows and outflows

Long term cost of isolation from global capital markets

Question 9

Objectives of capital restrictions

Answer 9

Reduce volatility of domestic asset prices

Maintain the exchange rate target avec politique fiscal et monétaire

Les domestic interest rates low

Protect strategic industries