Deck 19: Inflation, Deflation, and Macro Policyvi International Policy Issues

Question 1

How does considering trade in the broader cultural context change one's analysis

Answer 1

Trade occurs between different countries and countries have different cultures. Considering the trade in the broader cultural context provides a broader picture of various aspects of trade. It is often argued against western economic imperialism in which globalization spreads western cultural values and undermines developing countries social structures.
It is an understood fact that free trade is good but that doesn`t mean that it doesn`t have cost. It has some costs and the cultural exchange can be said as one of the cost. Including cultural consideration in the trade context means that everything cannot be measured in terms of money. Culture is something which should be protected even if it leads to different routes or speed for the progress of the world.
Understanding this fact collected from Wikipedia,
The Universal Declaration on Cultural Diversity adopted by UNESCO in 2001 is a legal instrument that recognizes cultural diversity as "common heritage of humanity" and considers its safeguarding to be a concrete and ethical imperative inseparable from respect for human dignity.
Beyond the Declaration of Principles adopted in 2003 at the Geneva Phase of the World Summit on the information Society (WSIS), the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions, adopted in October 2005, is also regarded as a legally binding instrument that recognizes
• The distinctive nature of cultural goods, services and activities as vehicles of identity, values and meaning;
• That while cultural goods, services and activities have important economic value, they are not mere commodities or consumer goods that can only be regarded as objects of trade.
It was adopted in response to "growing pressure exerted on countries to waive their right to enforce cultural policies and to put all aspects of the cultural sector on the table when negotiating international trade agreements". To date, 116 member states as well as the European Union have ratified the Convention, except the US, Australia and Israel.

Question 2

Mexico exports many vegetables to the United States.hese vegetables are grown using chemicals that are not allowed in U.S.egetable agriculture.hould the United States restrict imports of Mexican vegetables Why or why not

Answer 2

Whether the United States restrict imports of Mexican vegetables or not depend directly on the safety standards imposed by the U.S. regulators as well as indirectly on the help U.S. authorities want to extend to domestic vegetable growers in face of Mexican competition.
If the chemicals used by the Mexican vegetable growers do not conform to the regulations of U.S. authorities or considered harmful for human consumption, then restriction on import of Mexican vegetables is a valid case and United States should restrict imports of Mexican vegetables.
On the contrary, if Mexican vegetables complies with U.S. food and safety standards and are also cheap in comparison to U.S. grown vegetables then in interest of U.S. consumers and as per the principles of free trade there should not be any restriction on import of Mexican vegetables.
Moreover, if under tacit understanding with U.S. vegetable growers, U.S. authorities ban the Mexican vegetables on pretext of chemicals used in their production even though Mexican vegetables complies with U.S. food and safety standards, then this is not a valid argument and such type of anti - free trade measures should not be taken.

Question 3

How would a credible threat of trade restrictions lead to lower trade restrictions

Answer 3

In order to make the threat of trade restrictions by one country credible, sometimes countries must impose or increase trade restrictions in order to show that they are willingly doing that. For instance, China allowed significant illegal copying of U.S. software without paying royalties. The U.S then puts the pressure on China to stop such activity but felt that China was not responding effectively. To force compliance, the U.S made a list of Chinese goods that it threatened with 100 percent tariffs unless China complied. The U.S government did not want to put these restrictions but felt that it would have more strategic bargaining power if threatened to do so.
Thus, these strategic trade policies are a threatening policy to implement tariffs to bring about reduction in tariffs or some other type of trade restrictions from the other country.

Question 4

How has the nature of U.S.mports from China changed in recent years

Question 5

How might a country benefit from having an inefficient customs agency Some

Question 6

How are economies of scale, comparative advantage, and trade restrictions related

Question 7

Federic Bastiat wrote that "government is the great fiction through which everybody endeavors to live at the expense of everybody else." Is this a correct way to understand the fight about tariffs (Austrian)

Question 8

The text presents free trade as advantageous for developing countries.owever, in its period of most rapid development, the half century following the Civil War, the United States imposed tariffs on imports that averaged around 40 percent, a level higher than those in all but one of today's developing economies.
a.Why did so many of today's industrialized countries not follow those policies as they were developing
b.What does this insight into economic history suggest about the doctrine of free trade and whose interests it serves (Radical)

Question 9

Name three reasons economists support free trade.

Question 10

How important is international trade in terms of its relationship to total U.S.roduction What does this suggest about the importance of trade policies relative to other countries

Question 11

The world price of textiles is P w , as in the accompanying figure of the domestic supply and demand for textiles.
The government imposes a tariff t, to protect the domestic producers.or this tariff:
a.Label the revenue gains to domestic producers.
b.Label the revenue to government.
c.Label the costs to domestic producers.
d.Are the gains to domestic producers greater than the costs Why

Question 12

Why would a country want to be a most-favored nation Why might it not want to be a most-favored nation

Question 13

One of the basic economic laws is "the law of one price." It says that given certain assumptions one would expect that if free trade is allowed, the price of goods in countries should converge.
a.Can you list what three of those assumptions likely are
b.Should the law of one price hold for labor also Why or why not
c.Should it hold for capital more so or less so than for labor Why

Question 14

The U.S.overnment taxes U.S.ompanies for their overseas profits, but it allows them to deduct from their U.S.axable income the taxes that they pay abroad and interest on loans funding operations abroad, with no limits on the amount deducted.
a.Is it possible that the overseas profit tax produces no net revenue
b.What would you suggest to the government about this tax if its purpose were to increase corporate income tax revenue
c.Why might the government keep this tax even if it were not collecting any net revenue

Question 15

What is the relationship between GATT and WTO

Question 16

Will a debtor nation necessarily be running a trade deficit

Question 17

Who is likely to be more vocal when lobbying government to impose trade restrictions: producers or consumers Explain your answer.

Question 18

Federic Bastiat wrote: "It seems to me that this is theoretically right, for whatever the question under discussion-whether religious, philosophical, political, or economic; whether it concerns prosperity, morality, equality, right, justice, progress, responsibility, cooperation, property, labor, trade, capital, wages, taxes, population, finance, or government-at whatever point on the scientific horizon I begin my researches, I invariably reach this one conclusion: The solution to the problems of human relationships is to be found in liberty." What is problematic with this view (Radical)

Question 19

In 1964 President Lyndon B.ohnson imposed the Chicken Tax-a 25 percent tax on all imported light trucks in retaliation for a tariff placed by Germany on chickens imported from the United States.he light-truck tariff hurt Volkswagen van sales.ere these tariffs good or bad from the following perspectives
a.The U.S.overnment.
b.German consumers of chickens.
c.U.S.hicken producers.
d.U.S.ight truck producers.
e.Economists.

Question 20

Which countries are the two greatest trading partners for the United States With which countries is trade rapidly increasing

Question 21

In the 1930s Clair Wilcox of Swarthmore College organized a petition by economists "that any measure which provided for a general upward revision of tariff rates be denied passage by Congress, or if passed, be vetoed." It was signed by one-third of all economists in the United States at the time, of all political persuasions. month later, the Smoot-Hawley Tariff was passed.
a.Why did economists oppose the tariff
b.Demonstrate the effect of the tariff on the price of goods.
c.How would the tariff help the economy if other countries did not institute a retaliatory tariff
d.What would be the effect on the macroeconomy if other countries did institute a retaliatory tariff

Question 22

Suggest an equitable method of funding trade adjustment assistance programs.
a.Why is it equitable
b.What problems might a politician have in implementing such a method

Question 23

True or false In strategic trade bargaining, it is sometimes reasonable to be unreasonable.xplain.

Question 24

How are tariffs like taxes Demonstrate with a supply and demand curve.

Question 25

On January 1, 2005, quotas on clothing imports to the United States first instituted in the 1960s to protect the U.S.arment industry were eliminated.
a.Demonstrate graphically how this change affected equilibrium price and quantity of imported garments.
b.Demonstrate graphically how U.S.onsumers benefited from the end of the quota system.
c.What was the likely effect on profits of foreign companies that sold clothing in the U.S.arket

Question 26

Federic Bastiat wrote "when goods do not cross borders, soldiers will." Discuss.Religious)

Question 27

If you were economic adviser to a country that was following your advice about trade restrictions and that country fell into a recession, would you change your advice Why, or why not

Question 28

Demonstrate graphically how the effects of a tariff differ from the effects of a quota.

Question 29

Is it efficient for a country to maintain a trade barrier in an industry that exhibits economies of scale

Question 30

When the United States placed a temporary price floor on tomatoes imported from Mexico, U.S.rade representative Mickey Kantor said, "The agreement will provide strong relief to the tomato growers in Florida and other states, and help preserve jobs in the industry." What costs did Americans bear from the price floor

Question 31

What are three reasons countries restrict trade Are they justified

Question 32

Why do importers prefer a quota to a tariff Why does government prefer a tariff

Question 33

What are two important international economic organizations

Question 34

Who has benefited most from free trade Who has been hurt most by it Does that match the positions the various groups have about their support for free trade Which group do economists align themselves with Why (Post-Keynesian)

Question 35

Why would a country have trade assistance programs What makes them difficult to implement

Question 36

How do the effects of voluntary restraint agreements differ from the effects of a tariff

Question 37

What is economists' view of limited free trade associations such as the EU or NAFTA