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Chapter 16: Achieving Economic Stability (Misery Index (Sometimes called…
Chapter 16: Achieving Economic Stability
Misery Index
Sometimes called the discomfort index
Not an official government statistic
Is relevant only over long periods of time because of the wide month-to-month swings in numbers
Advantages and Disadvantages of International trade
People trade because they think they receive something worth more
Without international trade many products would not be available on the world market
Many imports are necessities, such as oil, clothing, and shoes
Globalization vs. Protectionism
Debate usually centers around 5 arguments
Protectionists say a country may not be able to get critical supplies
Protectionists overlook the fact that dollars return to the US when balancing payments
Collectivization vs. Privatization
Positively related
Privately owned firms have lower performance and efficiency
Collectivization was a market based process
Nafta
Before NAFTA US goods faced an average tariff of 10%
Opponents predicted that some high-paid American jobs would be lost
Proponents predicted that trade would dramatically increase
European Union
Ignored earlier WTO demands to drop American beef restrictions
Europe was discriminating against the US
Largest free trade area
Comparative Advantage
Based on the assumption that everyone will be better off producing what they produce the best
Specialization and trade increases the total world output
Trade something that is mutually needed in both areas