Tariffs: trade dispute between the United States and China.

In 2018, the US implemented tariffs on

around $250 billion worth of Chinese goods. This included machinery, electronics, furniture, and textiles.
In response, China imposed tariffs on about $110 billion worth of US goods, such as soybeans,
automobiles, and chemicals. These tariffs have led to higher costs for businesses, disrupted supply chains,
and impacted global trade patterns.
Demand-side policy: In 2020, the Australian government introduced the "HomeBuilder" grant, a
demand-side policy offering eligible homeowners a $25,000 tax-free grant to incentivize residential
construction and renovation. The aim was to boost demand in the construction sector, create jobs, and
stimulate economic growth. By December 2020, over 121,000 applications were submitted, leading to a
substantial rise in housing construction activity. This surge in demand not only benefited the construction
sector but also stimulated the demand for building materials, providing support to related industries.
Price Floor: Minimum wage laws, like the U.S. federal minimum of $7.25 per hour as of 2020, are a
real-world example of a price floor policy. The goal is to guarantee fair compensation for workers and
alleviate poverty. While supporters argue it reduces income inequality and boosts consumer spending,
critics contend it may result in job losses and reduced hiring. Despite the ongoing debate, minimum wage
laws exemplify a price floor policy aimed at addressing income disparities in the labor market.
Price Ceiling: Rent control in cities like New York and San Francisco sets price limits on rental
properties for affordable housing. While it helps tenants in the short term by keeping rents lower, it
discourages landlords from maintaining properties, leading to lower housing quality. Moreover, it can
reduce the availability of rental units, as landlords may convert properties or refrain from renting,
worsening housing shortages.
Carbon Taxes: One real-world example of a carbon tax is found in Canada. Under Prime Minister Justin
Trudeau, the country has implemented a nationwide carbon pricing program that starts at $15 per ton of
carbon dioxide and will rise to $38 per ton by 2022. The revenue generated from this tax is largely
refunded to Canadians, offsetting higher energy costs for about 70% of the population. The tax is a core
part of Canada's plan to achieve a 30% reduction in emissions below 2005 levels by 2030. Currently, the
tax covers over 26% of global CO2 emissions.
Asymmetric Info: mortgage crisis of 2007-2008. banks extended mortgages to consumers and sold them
to third parties, who packaged them as mortgage-backed securities and sold them to investors. The
securities were rated high-quality and sold as such. Many of the individual mortgages included in those
products were extended to borrowers buying overpriced homes beyond their means. The sellers had
information that the end buyers did not, as they knew that risky mortgages were being passed off as high-
quality debt…demonstrates how asymmetric information can lead to market failure and highlights the
consequences of such information asymmetry in the financial market.
Subsidy: In Germany, a subsidy example is the 2000 introduction of a feed-in tariff for renewable energy.
Producers received a fixed payment for each unit of wind and solar power added to the grid. With about
€189 billion invested from 2000 to 2019, the subsidies significantly boosted renewable energy, raising its
share in electricity production from 6% in 2000 to over 50% in 2019. This showcases how subsidies can
drive the adoption of green technologies and foster a shift towards sustainable energy systems.
Fiscal Policy: American Recovery and Reinvestment Act (ARRA) of 2009. In response to the global
financial crisis, the U.S. government employed expansionary fiscal policy to stimulate the economy. The
ARRA included measures such as tax cuts, infrastructure investments, and increased government
spending. According to the Congressional Budget Office (CBO), the ARRA boosted the gross domestic
product (GDP) by 1.4% to 4.1% in the years following its implementation. It also helped create or save
millions of jobs, with estimates ranging from 1.4 million to 4 million. Furthermore, it contributed to a
decline in the unemployment rate, which dropped from about 8% in early 2009 to around 5% by late
2016.
Demand-pull inflation: the housing market boom leading up to the 2008 financial crisis. As demand for
housing increased due to factors such as loose lending standards and speculation, prices surged rapidly.
According to data from the National Association of Realtors, the median price of existing homes rose by
87% from 2000 to 2006. This surge in demand and subsequent increase in prices contributed to the
housing bubble and eventually led to the collapse of the market, causing a severe recession.
Cost-push inflation: From 2010 to 2012, there was a significant increase in global oil prices. According
to the U.S. Energy Information Administration, the average price of crude oil per barrel rose from around
$80 in 2010 to approximately $100 in 2012. This surge in oil prices had a direct impact on industries
heavily dependent on oil, such as transportation, manufacturing, and agriculture. These sectors had to
bear higher production costs, forcing them to pass on the increased expenses to consumers. Consequently,
the prices of goods and services in the market rose, contributing to cost-push inflation.

Comparative Adv.: Since the late 20th century, particularly after its accession to the World Trade
Organization (WTO) in 2001, China has been recognized for its comparative advantage in manufacturing.
This advantage stems from a combination of lower labor costs, an expanding industrial base, and
government support for manufacturing sectors.

Supply Shock: A sudden real economic supply shock occurred on October 12, 2022, in Eastlandia, a
leading global electronics manufacturing hub. A devastating earthquake disrupted crucial supply chains,
causing widespread production halts and shortages of key components.