ECON 103 Study Guide - Comprehensive Final Guide: Market Basket, Federal Funds Rate, Nominal Interest Rate
1 Dec 2016
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9-3 arguments for restricting trade: jobs argument free trade destroys domestic jobs. Free trade also creates jobs though because each country has a comparative advantage: national security argument. When industry is threated with competition from other countries, opponents of free trade often argue that the industry is vital in national security (ex: steel to make guns and tanks) Highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose infant industry protection. New industries sometimes argue for temporary trade restrictions to help them get started. Similarly, older industries sometimes argue that they need temporary protection to help them adjust to new conditions. Policymakers argue that trade restrictions can be useful when we bargain with our trading partners. This bargaining strategy may not work though: economists still believe that free trade is usually a better policy.
