lecture 2-25-08

lecture 2-25-08 - Cassie Morgan Trade theories try to...

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Cassie Morgan Trade theories try to explain what we are going to see trade in Benefits of trade Patterns of trade Mercantilism 16 th /17 th century: Thomas Mun: not free trade suggests countries should encourage exports and discourage imports trade surplus as goal national wealth, prestige, power though discredited, remain evident in modern political debate and policy import tariffs/quotas,, export subsidies Absolute Advantage 18 th century: Adam Smith explains why unrestricted free trade is beneficial to countries countries differ in their ability to produce goods efficiently leading to ABSOLUTE advantages invisible hand rather than government policy should determine imports/exports and will follow pattern of absolute advantages Comparative Advantage 19 th century: Ricardo takes Smith a step further to focus on COMPARATIVE rather than ABSOLUTE advantages absolute advantages vary- so specialize in production where advantages are greatest these are COMPARATIVE advantages and rely on others for their comparative advantages
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This note was uploaded on 04/07/2008 for the course IBUS 200 taught by Professor Elms during the Spring '08 term at American.

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lecture 2-25-08 - Cassie Morgan Trade theories try to...

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