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Global Econ - Trade Policy - lecture

Global Econ - Trade Policy - lecture

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Published by Katherine Sauer
overview of trade policy
overview of trade policy

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Categories:Types, School Work
Published by: Katherine Sauer on Jun 16, 2010
Copyright:Attribution Non-commercial


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Trade Policy
Dr. Katherine Sauer Global Economic IssuesECON 241
Governments often manipulate trade to achieve various economic, political, and diplomatic objectives.Types of Trade Barriers1) tariff: tax on importsspecific tariff = fixed tax per unit of good importedex: $1 per pair of sunglasses importedad valorem tariff = percentage tax applied to the total valueof importsex: a 5% ad valorem tax on sunglasses meansif import $1000 worth of sunglasses, thenthe tariff is $50
2) export subsidies: involves a transfer of funds from thegovernment to an export producer -encourages exports-helps domestic industry (props up domestic price)3) non-tariff measures for restricting importsa. quantitative restrictions (quota): a limit on the quantityof a good that can be imported-the government grants licenses to certain firmsallowing them to import a certain quantity b. tariff rate quota: a tariff with two levels-lower tariff for imports within the quota-higher tariff for imports that exceed the quota

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