Economics Notes

➡️ Changes in the terms of trade are caused by changes in the relative prices of exports and imports. This can be due to changes in the supply and demand of goods and services, changes in exchange rates, or changes in government policies.
➡️ Changes in the terms of trade can also be caused by changes in the quality of goods and services traded, or by changes in the cost of production.
➡️ Changes in the terms of trade can have a significant impact on a country's economic performance, as it affects the amount of goods and services that can be purchased with a given amount of money.

➡️ Changes in the terms of trade can have a significant impact on a country's economic output.
➡️ A change in the terms of trade can lead to an increase or decrease in the price of a country's exports relative to its imports, which can affect the country's balance of payments.
➡️ Changes in the terms of trade can also affect the level of economic activity in a country, as a change in the terms of trade can lead to an increase or decrease in the demand for a country's exports, which can have a positive or negative effect on the country's economic output.

➡️ Absolute advantage theory assumes that countries have unlimited resources and ignores the cost of production. This means that it does not take into account the cost of production, which can be a major factor in determining the comparative advantage of a country.

➡️ Comparative advantage theory assumes that countries have perfect knowledge of their own resources and ignores the fact that countries may not have perfect information about the resources of other countries. This means that it does not take into account the possibility of countries having an advantage in certain resources that they may not be aware of.

➡️ Both theories assume that countries are only interested in producing goods and services for their own consumption, ignoring the potential for international trade. This means that they do not take into account the potential for countries to benefit from trading with each other.

➡️ Protectionism is an economic policy that restricts international trade through tariffs, quotas, and other restrictions. It is used to protect domestic industries from foreign competition and to promote domestic economic growth.

➡️ Protectionism can have both positive and negative effects on an economy. On the one hand, it can protect domestic industries from foreign competition, allowing them to grow and develop. On the other hand, it can lead to higher prices for consumers, reduced competition, and decreased efficiency in the economy.

➡️ Protectionism can also lead to retaliatory measures from other countries, resulting in a trade war. This can have a negative effect on the global economy, as countries become less willing to trade with each other.

➡️ Protectionism is a policy of shielding a country's domestic industries from foreign competition by imposing tariffs, quotas, or other restrictions on imports.
➡️ Protectionism is often used as a tool to protect domestic producers from foreign competition, allowing them to charge higher prices and increase profits.
➡️ Protectionism can also be used to protect domestic jobs, as it can reduce the number of imports and thus reduce the number of jobs lost to foreign competition.

➡️ Tariffs: Tariffs are taxes imposed on imported goods, making them more expensive and less attractive to consumers. This can help protect domestic industries from foreign competition, allowing them to maintain higher prices and higher profits.
➡️ Quotas: Quotas are limits on the amount of a certain good that can be imported into a country. This can help protect domestic industries by limiting the amount of foreign competition they face.
➡️ Subsidies: Subsidies are payments made by the government to domestic industries to help them remain competitive. This can help protect domestic industries by making their products more attractive to consumers than foreign competitors.

➡️ Tariffs are taxes imposed on imported goods and services.
➡️ Tariffs are used to protect domestic industries from foreign competition by making imported goods more expensive.
➡️ Tariffs can also be used to raise revenue for the government, or to influence the behavior of other countries.

➡️ Reduced competition in the domestic market, leading to higher prices for consumers.
➡️ Increased profits for domestic producers, leading to increased economic activity.
➡️ Reduced imports, leading to a decrease in foreign exchange earnings for the country.

➡️ Increased exports: Export subsidies can help to increase the competitiveness of domestic goods in foreign markets, leading to an increase in exports.
➡️ Improved balance of payments: Export subsidies can help to improve a country➡️s balance of payments by increasing the amount of money coming into the country from foreign markets.
➡️ Increased employment: Export subsidies can lead to increased employment in the domestic economy, as more people are needed to produce the goods for export.

➡️ Embargoes are restrictions on trade imposed by one or more countries on another country.
➡️ They are used to limit the flow of goods, services, or capital between countries, and can be used for political, economic, or military reasons.
➡️ Embargoes can have a significant impact on the economy of the target country, as they can reduce the availability of goods and services, and can lead to higher prices and reduced economic growth.

➡️ Increased efficiency in the production process, leading to lower costs and higher profits.
➡️ Improved customer service, leading to increased customer satisfaction and loyalty.
➡️ Reduced compliance costs, leading to increased competitiveness in the market.

➡️ Protectionism is the practice of shielding a country's domestic industries from foreign competition by imposing tariffs, quotas, or other restrictions on imports.
➡️ Proponents of protectionism argue that it can help protect domestic jobs, promote infant industries, and increase national security. It can also help protect domestic producers from unfair competition from foreign producers who may have access to cheaper labor or resources.
➡️ Opponents of protectionism argue that it can lead to higher prices for consumers, reduce competition, and lead to retaliatory measures from other countries. It can also lead to a decrease in global trade, which can have a negative impact on economic growth.