Shifters

Shifters of Imports and Exports

1. Tastes of consumers for goods

2. Price of goods

3. Exchange Rates (at which people can use dom. currency on foreign goods)

4. Income of consumers

5. Cost of transporting goods (from country to country)

6. Gov. policy toward international trade (tariffs type shit)

1. Benefits of International Trade

1. Increase in variety of goods

2. Lowered costs (prod. at low cost due to large quan. of output {mass production})

3. Increased competition

4. Increased productivity 

5. Enhanced flow of jobs

Arguments AGAINST International Trade:

1. Jobs (can be threatened if we don’t have comp. advantage)

2. National Security

3. Unfair Competition

4. Infant Industries (new industries need temp relief to them compete)

5. Trade restrictions hurt citizens (higher prices, limited product choice, jobs…)

1. Aggregate Demand Shifters: CONSUMPTION

1. Change in: taxes, wealth, expected future income

1. Aggregate Demand Shifters: INVESTMENTS

1. Examples: Better technology, tax policy, money supply, interest rates

1. Aggregate Demand Shifters: GOVERNMENT SPENDING

1. Examples: build new roads, weapons contract, entering new military effort

1. Aggregate Demand Shifters: NET EXPORTS

1. Recession in Europe → can’t buy exports → change in exchange rate

1. Short Run Aggregate Supply Shifters:

1. Primary shifter: anything that affects production of g/s OR changes in input or resources (gas, silicon, wages, raw material prices)

1. Long-Run Aggregate Supply Shifters:

Any change in the economy that alters the national level of output shifts the LRAS

1. Change in Labour: If quan of labour increases, LRAS shifts right →

2. Change in Capital: If physical capital increases, LRAS shifts right →

3. Change in Natural Resources: New discovery of natural resources, shift right →

4. Change in Technological Knowledge: New Technology, LRAS shift right →