ECO102H1 Lecture Notes - Lecture 22: Capital Outflow, Canadian Dollar, Capital Account
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ECO102H1 Full Course Notes
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Free trade: makes the country better off (gains from trade: individual firms and industries may suffer. Protection: diversification and protection of infant markets, maximization of national incomes (tariffs if needed) Tariffs: tax on imported goods, domestic prices rise and qd for domestic goods decreases, benefit to domestic producers comes at the expense of domestic producers, overall net effect is negative and generates dwl. Quotas: restricts the quantity of an imported product, raises the domestic price and increases domestic production, but decreases domestic consumption, has a similar effect on domestic consumers and producers as does a tariff. To purchase goods from another country, need to exchange domestic currency for foreign currency. For foreign countries to purchase canadian goods, need to exchange foreign currency for. Balance of payments: record of a country"s transactions with the rest of the world: current account. Payments and receipts arising from trade in goods and services (trade account)
