ECON 103 Lecture Notes - Lecture 3: Protectionism, Comparative Advantage, Capital Account

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In a protectionism policy, a tax would be put on an imported good and not a domestic good: protectionism is meant to protect domestic companies, protectionism cannot protect jobs or increase or decrease employment, protectionism rather shifts employment. China and us free trade: china exchange steel to us, us exchange lumber to china, trade doesn"t cause job to rise or fall, trade shift job from us steel industry to lumber. Shift employment from both country, shift from one job to another: number of job increases, by making it more costly to buy steel from china, america impose taxes for american who buy chinese good. If american buy steel made in american, they dont have to pay tax. Disadvantaging stuff from china, making it less attractive to american buyers, so they dont buy it, they buy american made: people in lumber industry lose their job. Concern about free trade: trade is bad, trade destroy economy.

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