Knowt
Macro Exam 2 manual review
Imports - goods and services bought domestically but produced in other countries
exports - goods and services produced domestically but sold in other countries
free trade - trade between two countries that is without government restrictions
tariffs - taxes imposed by a government on imports
import quotas - numerical limits imposed unilaterally upon (qutoas) countries on the quantity of a good imported by one country from another country
import quotas - numerical limits imposed unilaterally upon countries on the quantity of a good imported by one country from another country, often used to protect domestic industries from foreign competition.
What is the difference between tariffs and import quotas?
Tariffs are taxes that the government places on imported goods of a specific type
import quotas are import limits that prevent more than a set amount of a specific good from being imported into a country
How are tariffs and import quotas similar?
both are trade barriers that governments use to protect domestic industries from foreign competition. They aim to stabilize local markets and improve the profitability of local businesses by limiting the availability of cheaper foreign products.
GDP - the market value of all final goods and services produced in a country during a period typically one year
GNP - the value of final goods and services produced by a countries residents even if the actual production of the goods and services occurs outside the boarders of the country
What is the difference in GDP and GNP?
GDP measures the economic performance within a country's borders, while GNP accounts for the economic contributions of a nation's residents regardless of location.
What are the short comings of using GDP as a measure of total production
GDP does not account for the value of non-market transactions, such as household labor and volunteer work, and it also fails to consider the distribution of income among residents, which can lead to misleading conclusions about overall economic well-being.
however, if the homemaker decides to work outside the home, and has all their duties performed by other people or businesses, the value of the GDP will rise by the amount paid for everything even though the production of other services has not increased
Also, individuals and firms can sometimes conceal the buying and selling of goods and services, in which case their production isn’t counted in GDP
There are three basic reasons why individuals and firms would conceal what they buy and sell
they are dealing in illegal goods and services, like drugs or prostitution
they want to avoid paying taxes on the income they earn
they want to avoid government regulations
Who benefits from international trade? Who loses from international trade?
Benefits: Consumers gain access to a wider variety of goods at lower prices, while producers can expand their markets and increase profits. Developing countries can also benefit from foreign investments and technology transfer.
Loses: Domestic industries may suffer due to increased competition, leading to job losses. Additionally, workers in sectors unable to compete may face wage stagnation or decline.
the labor force - the sum of employed and unemployed workers in the economy
only employed and unemployed individuals actively seeking a job are included the labor force
people who do not have a job and are not actively seeking employment are not in the labor force
Discouraged workers - workers who are available for work but have given up actively seeking employment because they think there are no jobs available to them
the labor force participation rate is the percentage of the working age population in the workforce
the working age population equals the labor force plaus those individuals not in the labor force
fricitonal unemployment - a short term unemployment that arises from the process of matching workers with jobs
structural employment - the unemployment rising from a persistent mismatch between the skills and characteristics of workers ad the requirements of a job
cyclical unemployment - unemployment caused by a recession
full employment - when cyclical unemployment is zero
