POLSCI 160 Lecture 21: Lecture 21 Notes
Document Summary
Int economic policies affect groups in society: firms, workers, consumers, and other organized interests. Int political economy address development, trade, money, finance. In a market where there is free trade, there will be an equilibrium price. Markets determine prices of anything traded openly. Also a price that can be changed. Assets in finance can change in financial crisis " many want to sell, no one wants to buy. National economic policies can influence prices of goods. Export subsidies: lower the price of exports. Trade have large political consequences, creates competition between imports and domestic goods. Comparative advantage is that each state produces goods where it has a comparative advantage and then trades. Scarce factors suffer from openness of trade, but plentiful factors prosper. Common skilled labor broadly benefits from openness of trade. Mobility of factors across sectors accounts for losses. Exchange rates, or the relative prices of currencies. Rising currency makes imports cheaper and exports more expensive.
