EC 340 exams Essays

Points:  5 questions at 40 points each for 200 points for 25% of your grade (all will be sliding scale).

1. In President Obama’s speech at West Point, he announced that 30,000 additional troops would be sent to Afghanistan. He made this decision because he said it was vital to the United States’ national interest. The vital national interest at risk in President Obama’s address is the security and safety of the American people as well as the “security of our allies and the common security of the world.” By involving the military and increasing the troop strength, President Obama can achieve the objectives of his strategy. His objectives are to keep the Taliban from becoming powerful, prevent them from government rule, improve Afghanistan security forces and government so they can manage their own country and prevent Al Qaeda from

Section A: Answer all questions. Total 42 points – each question in this section carries 3.5 points. Write the responses to ALL questions in your answer sheet.

- There are 40 multiple choice questions. Each multiple choice question is worth 1 mark.

From an academic standpoint, economists overall believe that free trade would benefit the economy more than instituting tariffs and non-tariff trade barriers. However, the reality is quite different. Politically, tariffs help to strike a balance between social welfare and the politicians’ goals. One theory is that campaign contributions are needed for re-election; and to achieve these funds, politicians will weigh this need against welfare-reducing protection for industry lobbyists (Magee, 2011). The models would suggest that the tariffs should actually be much higher than they are due to the low efficiency cost of tariffs compared to the substantial gains provided for the producers (Magee, 2011). However, developed countries actually have very low tariffs. There are six possible explanations for why developed countries have such low tariffs when the political theories behind why we have tariffs at all would suggest they should be higher.

Unemployment: The reduction of tariff barriers leads to greater competition inthe domestic market for the imported product leading to loss of market shareand laying off of workers in that sector. In the short run, this kind ofdislocation can cause considerable hardship to the affected workers.

When a tariff is introduced, the consumer surplus at the world price (A+H+I+J+G+C+D+E+F) is decreased to the tariff price (A+H+I+J).

[This task requires you to use the MARIE simulator for Questions 1 and 2. Prior to starting this task, you must ensure that the simulator is running correctly by completing the tutorial provided with the simulator, located under Resources within the Interact site.]

Article II sets forth an obligation of all Members called Most Favored Nation treatment (MFN). The main purpose of MFN is to ensure the equal treatment among Members by creating an obligation to guarantee and treat all like services and service suppliers of the other members equally and without discrimination. However, what is considered a “like” service or service supplier remains undefined in Article II, and efforts to define the term under GATS is described by the WTO as “limited and inconclusive”. In fact, several disputes brought forward under the WTO’s dispute-resolution body have failed to adequately address this shortcoming. Nonetheless, Members are required to oblige this requirement regardless of its

On the other hand, the economists would disagree on the trade protection policies due to the company facing a loss which weakens the company in the long run, which is why they would not want to support the use of this.Trade policies invov A few examples of the trade policies would be Tariffs and (give other examples and explain). The use of trade usually represents a significant share of GDP which is known as the gross domestic product. In the process of trading,there would be some risks

2. Tariffs on products that can not be produced indoors, that can be produced less or that can not increase production will be kept low,the tariffs will be kept high for products that are potentially or competing with imported products.

Tariffs are sorts of taxes on imported and exported goods. It could affect the supply and demand of the merchandise. It started thousands of years ago when different countries’ merchants exchanged goods with each other. Governments who use tariffs to protect the local economy and national benefits play an important role in trading until now. It is a useful tool for governments to negotiate with other countries on diplomacy. However, tariffs become barriers to globalisation and it can have negative effect on domestic economy and industries. Today, with the globalisation, each country may still consider to protect their local economy first instead of removing tariffs from imported products. Interestingly, many countries would love to gather

The duty applicable in the case of tariffs (and thus the actual revenue accruing) can be worked out of three ways.

Marginal welfare is the third, and related, costs of increasing additional revenues from a tariff tend to be high compared to a yield equivalent consumption tax or VAT. This is due to two distorting margins are involved instead of

Part one questions carry 1 mark each & Part Two questions carry 4 marks each.