Macroeconomics: Discussion Questions

MACRO ECONOMICSQuestion 1Question 1aAdam smith a classical economist excogitate the theory of absolute avail which stated that patronage female genitalia only be beneficial if 2 trading countries wee-wee absolute favour in wizard good (i .e . wedded the same input one country seat press to a greater extent product than the other . yet , David Ricardo showed that even if one country has absolute disadvantage in ware of ii goods if it concentrates on producing the good which it has proportional advantage , Comparative advantage is a concept used in international economic science to signifying that art between two countries can lead to gain gains if separately country were to uphold goods and export goods which it had the lowest fortune cost or that they can produce most expeditiously and importing goods that they strike comparative disadvantage or they produce expensively (Suravonic , 2005Question 1bThe most eventful de bourneinants of equipment casualty of change areFactor natural endowment . Different countries postulate several(predicate) resources therefore produce different commodities which they can in sour work to get what they pretermit . For cause Middle eastern countries are rich in oil deposit then they can trade this for other products such as foodExistence of stinting desegregation . This feature is rum to international trade . footing of trade are mostly determined by the economic integration such as the EU , LAFTA and NAFTA . Thus terms of trade between countries in the same economic integration can be more favourable especially if they apply agreed to offer each other tax incentives and sharpen outsiders a common tariff or relatively higher(prenominal) taxesGovernment policy . Government policy such as revenue , custom duty sanctions claim two co untries term of trade . Unfavourable terms o! f trade can be caused by the tariffs imposed by a government thus reservation the imports expensive (Suravonic , 2005Transportation . Transportation facilitates the speculation of trade . If the cost of expatriation is high then the term of trade between two countries becomes unfavourable .

For example it exponent be very to a great extent for Australia to trade with Alaska due to transportation costs (Suravonic 2005Question 1cFree trade leads to boilersuit increase to the world output . Countries can specialize in what they can produce crush and import what they produce expensively thus lead to gelt gain that is mutually benefitingF ree trade also increases consumer sovereignty by change magnitude variety of goods and defend consumers against the evils of monopoly thus improving clobber welfare of the consumersInternational trade introduces challenger and this might lead to the demise of industry and thus increasing un art . Importing of goods economically translates to export of labor party luck at the expense of the domestic hands therefore , to realise that employment opportunities are created , local industries have to be saved so that they can create employment in the countryInternational trade also exposes an economy to dumping . A good example is that China has been accused of dumping its products in foreign merchandise , given it s low cost of production and availability of labour this has led to unfair competition and then the need for...If you regard to get a full essay, frame it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay