EECS 1530 Lecture 3: EECS 1530 Lecture 3 Notes
21 Jun 2018
School
Course
Professor
EECS 1530 Lecture 3 Notes
Introduction
Restrictions on imports
In response to this lobbying, the U.S. government decides to impose restrictions on
imports.
Vegambia’s vegetable exports to the United States consequently decline, and its
unemployment rate rises.
Vegambia’s government decides that it can correct its unemployment rate by improving
its balance-of-trade deficit.
Some of its firms specialize in manufacturing toys, but sales have been weak recently
because many local citizens purchase toys imported from the United States.
The government of Vegambia determines
The U.S. toy manufacturers have an unfair advantage because they pay low taxes (as a
proportion of their income) to the U.S. government
The toys produced in the United States present a health risk to local children because
they are reports that a few children hurt themselves while playing with these toys
The U.S. government has failed to intervene in some foreign countries to prevent the
production of illegal drugs that flow into Vegambia, so Vegambia should reduce U.S.
imports as a form of protest.
Therefore, the government of Vegambia prohibits the importing of toys from the United
States.
One conclusion from the preceding example is that any government can find an
argument for restricting imports if it wants to increase domestic employment.
Some arguments might be justified; others, less so.
Naturally, countries that are adversely affected by a trade policy may retaliate in order
to offset any adverse effects on employment.
This means that the plan to create jobs by restricting imports may not be successful.
Document Summary
In response to this lobbying, the u. s. government decides to impose restrictions on imports. Vegambia"s vegetable exports to the united states consequently decline, and its unemployment rate rises. Vegambia"s government decides that it can correct its unemployment rate by improving its balance-of-trade deficit. This means that the plan to create jobs by restricting imports may not be successful. It is noteworthy that, even when the overall employment situation for both countries is unchanged, employment within particular industries may be changed by government actions on trade. In this example, the agriculture firms benefit from the u. s. government policy at the expense of the toy manufacturers. It can correct its unemployment rate by improving its balance-of-trade deficit. Some of its firms specialize in manufacturing toys, but sales have been weak recently because many local citizens purchase toys imported from the united states.
