National debt today = 9.83 trillion. Government Securities – Main source of income Crowding out effect – if gov spending increases, and starts running deficits – will cause interest rates to rise and crowds out private sector. Lower interest rates = housing market going down. By increasing G, leads to deficits, tends to cause interest rates to go up. . Structural Deficit- Federal revenues at full employment minus expenditures at full employment under prevailing fiscal policy. Cyclical Deficit – that portion of the budget balance attributable to short-run changes in economic conditions. Dumping – exporting something to America for less than they are charging at home (ex: Japanese w/ steel). We try to stop this with higher tariffs and quotas. Chinese currency (Won) usually has a fixed rate. NAFTA – NA Free Trade Agreement (Canada, USA, Mex). GAFT – General Agreements on Tariffs and Trade. Big Discounters take out small businesses (don't shop at Walmart!). Barriers to trade : Tariffs – purpose is to protect domestic industries from competition – makes domestic goods cheaper, usually deployed by a tax on 'x'. Quota – limit on a good that can be imported 'm', purpose of protection -> no revenue. Licensing procedures – limits number of trades on 'm'&'x'. Trade embargo – stopping trade w/ another country. Possible tariff justifications- imposing tariff as recession cure. Problems : 1. when imposing a tariff, usually results in higher prices. 2. transfers unemployment from home to abroad. 3. Retaliation tariffs from other countries. National security. - so your not totally dependent on other countries. Infant Industries – with lesser developed countries, it allows for temporary protection. Exchange rate(1 U.S. Dollar
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This note was uploaded on 08/14/2008 for the course ECON 101 taught by Professor Bansak during the Fall '07 term at San Diego State.