Understanding Trade Dynamics and Policies Impact
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One of the dynamic gains from trade is the diffusion of technological advance. Can you explain this gain and the impact on domestic companies? 10 points.
The dynamic gains refer to the relationship between trade and economic growth. The economy experiences increases in its stock of productive factors because a technological innovation helps a country's existing stock of factors to become more efficient. This means in our model the PPF has a growth.
The United States has used quotas to protect its domestic sugar industry. What has been the likely impact of these quotas on the world price of sugar (relative to the price that would exist under free trade)? 10 points.
Quotas restrict the amount of foreign competition in the marketplace, so that means... Continue reading "Understanding Trade Dynamics and Policies Impact" »