1: Trade and Environment
Pessimists: Trade hurts the environment
Destructive production and distribution
Increases in destructive exports
Increase in transportation pollution
International Trade of Endangered Species
With the growing concern for protection of endangered species,
organizations are created to help construct and enforce certain laws pertaining to
international trade in hopes to preserve survival of species. The l
Which of the following determinants causes a decline in aggregate
demand? (hint: table on p592)
Increased worker productivity (AS to increase; rightward shift)
lower real interest rates (AD will increase)
an increase in government spending (AD will
A decrease in aggregate demand- higher real interest rates
The result of an increase in aggregate supply is lower aggregate price level
The side-effect of contractionary monetary policy is recession
A depreciation (weaker currency) of the exchange rate ca
Define a free trade area: A type of bloc (FTA) that is the smallest degree
of trade integration. No more internal barriers among member countries,
but each country still chooses its own external barriers. Examples: Free
Trade and Labor:
What is an import surge?
Import surge a dangerous, fast import increase, too fast to adapt to.
This can cause sweeping bankruptcies in the domestic industries.
Why did the U.S. car industry decline?
The U.S. car industry lost a lot of c
What is a tariff?
A tariff is a tax on imports, raises the price of imports for
consumers. Tariffs provide protection to local industries and so in
international trade theory, protection is a synonym for barriers.
Specific tariff: a fixed money
International Economics notes
Tariffs Tax on imports
Ad-valorem tariff Fixed %
Compound tariff tariff on quantity % on the value (sliding equalizing
tariff) Matches inflation
Specific tariff fixed
Why study international economics?
The world is made up of separately governed countries with differing national
how economies are structured
Resources & productivity
International Economics (1/9/2014)
Mercantilism: 1500-1800 ad
Closed economy is isolated from trade
Free trade policy is bad for a nations welfare
Their goals -> use trade policies
Export policies : Designed to accu
1. Many of the social and individual behaviors studied by economics tend to deal with the
mind of consumers and businesses as they fluctuate in an economic system. The law of
supply and demand shows how both businesses and consumers behave under different
3 Culture Theory
Attention to detail
Producing engineering intensive products: Luxury cars, high quality
optics, specialty tools
Social skills and team working
Customer research and m
Explain barrier arguments, and free trader responses: national
defense, cultural protection.
National Defense: Theory: Protect industries making items crucial
to national defense. Do not become dependent on foreign countries
(imports can be cut off by w