International Economics Lecture_4

PAOLO V. VALLADAREZ, LL.B. Instructor

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[object Object],Strong army, strong navy and Merchant marine and productive economy ACCUMULATION OF PRECIOUS METALS

BULLIONISM SYSTEM WHERE GOVERNMENTS CONTROL THE USE AND EXCHANGE OF PRECIOUS METALS

[object Object],Commodities were valued relatively in terms of their relative labor content ● ECONOMIC ACTIVITY SHOULD BE REGULATED AND NOT LEFT TO INDIVIDUAL PREROGATIVE.

* POLICIES ON POPULATION AND LABOR WERE INFLUENCED BY TRADE POLICIES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

* MERCANTILISTS STRESSED THE IMPORTANCE OF A FAVORABLE TRADE BALANCE MERCANTILISM PROTECTIONISM =

* MERCANTILISM and DOMESTIC ECONOMIC POLICY ,[object Object],[object Object],[object Object]

ADAM SMITH ● CRITICIZED MERCANTILISM ● THE WEALTH OF THE NATION IS NOT MEASURED BY GOLD AND SILVER, INSTEAD THE WEALTH OF THE NATION IS BEING MEASURED ON THE GOODS AND SERVICES AVAILABLE FOR THE CONSTITUENTS OF THE SOCIETY

ANALYSIS: ,[object Object],2. However, disadvantage is less in corn than in shoes. 3. Hence, U.K. has a comparative advantage with respect to the U.S. in corn and comparative disadvantage in shoes. 4. U.S. has greater absolute advantage over U.K. in shoes than in corn – U.S. has a comparative disadvantage in corn and a comparative advantage in shoes. 2 3 CORN 1 6 / labor-hr SHOES United Kingdom United States

SEATWORK ,[object Object],[object Object],[object Object],[object Object],3 4 Cloth (yards/Labor-hr) 1 6 Wheat (bushels/labor-hr) U.Kingdom United States

Why are tariffs / quotas imposed? ,[object Object],[object Object],[object Object]

INSTRUMENTS OF TRADE POLICY ,[object Object]

In what ways can a country interfere with trade? ,[object Object],[object Object],[object Object],[object Object]

OTHER FEATURES OF TARIFF LEGISLATION ,[object Object],[object Object]

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NONTARIFF BARRIERS ,[object Object],[object Object],[object Object]

International Economics Lecture_4

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