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SOCI 307 (17)
Lecture 5

Lecture 5- Trade, Monetary, and Fiscal Policy.pdf

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McGill University
Sociology (Arts)
SOCI 307
Zygmunt Mochnacki

Caretakingcourse adddrop date tomorrowwednesday 330 enrol for Friday conferences on Minervathree conference times 1230 130 230capacity 2530 studentslink to glossary of terms on MyCourses Scottish Referendumnot to secure cultural heritage but for autonomy over economic decisions Some Basics on Trade Monetary and Fiscal Policytrade policy commodity imports and exportsbalance of tradesnet value of a nations imports vs exportsbalance of paymentsnet difference in trade and financial transactionsie outflows and inflows of money from a statecapital account FDI loans and current account trade and incomemercantilismnational interest above all autonomy selfreliancefree tradecomparative advantage mutual benefit and dependence instruments of trade policycustomstariffs embargoes quotas dumpingantidumping standards regulations protectionism and import substitutionbilateral multilateral plurilateral regional trade agreements exchange rate to make national products more competitive visavis imports by devaluing your currency How Monetary Policy Shapes Trademonetary policysupply of money central reserve bank lender of last resort market signals to private banks Greece had no national bank when they tanked needed European Central Banktradespecific endsmanagement of risk and building capacity for outside trading partners market signalspromoting growth of local exports adjusting local currency access to creditother domestic endseconomic growthstability stimulating employment local firms managing incentives for FDI monetary policy instrumentsinterest rateexchange ratemake local goods more or less competitive or else stabilize the valueemergency loans and bonds PIIGS handled by European Central Bank Fixed vs Floating Exchange Ratesfixedobjective stabilize value of local currency price of goodscentral bank pegs currency to world currency ie USDto manage stability central bank removes or replenishes supply of money through reserves of foreign currencyGold Standard system dependent on world currency nation guarantee of value through convertibility to goldreliant on reserves of central bank and of world currency nationproblem is that it is so reliant on reserves even when there are fluxes in the system flo
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