Exam2 - FC2 - The flashcards are formatted for printing....

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Unemployment Government
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Typically not friendly; thousands of their people starve to death every day because they want them to (there’s enough food). Trade barriers are used to protect jobs in certain industries, but increase prices, causing all consumer prices go up, thereby losing more jobs than you save (i.e. steel price increases so
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automobile and machine prices increase).
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Infant Industry Argument Unemployment
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Politicians protect whoever’s making the most noise concerning the subject. Companies argue to protect them for a short time as they get started, but they get used to the leeway and can’t adapt without it, thereby building an industry dependent on price; helps small
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number for a small time (i.e. price drops from $100 to $8).
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Balance of Payment Adjustment Industrialization Argument
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Large version of the infant industry argument over the entire economy. A problem arises when you import more than you export, so increase barriers to decrease imports and increase exports (i.e. the US has a huge problem since we export cash, effectively creating
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interest-free loans).
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Restrictions as Bargaining Tools Comparable Access
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If we have hard rules, and you have simple rules, you need to make them harder because it’s not fair. Offer tariffs and subsidies as a threat (US does it).
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1. Unemploym ent 2. Infant industry argument 3. Industrializa tion argument Price Control Objectives
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Lock price to keep people from starving; hardest to fight because it has the strictest barriers; as an international manager, run away because you can’t make profits (i.e. rice in Japan). Economic arguments for why governments intervene with trade:
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1. Maintenanc e of essential industries 2. Prevention of shipments to “unfriendly” countries 3. Maintenanc 1. Balance of payments adjustment 2. Comparable access 3. Restrictions as bargaining tools
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e of sphere of influence 4. Protecting national identity 4. Price control objectives
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This note was uploaded on 09/08/2011 for the course GEB 3375H taught by Professor Robertsweo during the Spring '11 term at University of Central Florida.

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Exam2 - FC2 - The flashcards are formatted for printing....

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