EECS 1520 Lecture Notes - Lecture 27: American Apparel

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EECS 1520 Lecture 27 Notes
Introduction
Production and income
Each countrys government wants to increase its exports because more exports lead to
more production and income and may also create jobs.
Moreover, a countrys government generally prefers that its citizens and firms purchase
products and services locally (rather import them) because doing so creates local jobs.
An easy way to start an argument among students (or professors) is to ask what they
think their countrys international trade policy should be.
People whose job prospects are significantly influenced by international trade tend to
have strong opinions on this subject.
Governments of countries with a weak economy tend to become more creative and
aggressive with policies that are intended to boost their exports or reduce imports.
There are several types of policies often used to improve the balance of trade and
thereby to create jobs within a country.
Restrictions on Imports Some governments prevent or discourage imports from other
countries by imposing trade restrictions.
Of these, the most commonly used are tariffs and quotas.
When a countrys government imposes a tax on imported goods, which is also known as
a tariff, consumers must pay more to purchase foreign goods.
Many governments impose tariffs on imported cars as a means of encouraging the
exporter to establish local subsidiaries that will manufacture the cars (and create local
jobs).
Tariffs imposed by the U.S. government are, on average, lower than those imposed by
other governments.
Even so, some U.S. industries are more highly protected by tariffs than are others.
American apparel products and farm products have historically received more
protection against foreign competition through high tariffs on related imports.
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