Macro Essay Plans Flashcards
(5 cards)
Describe how comparative advantage explain the pattern of international trade
Point 1:
- CA states that countries should specialise in goods where they have a CA and trade for other goods
- leads to mutual gains from trade, increased global eff, and a pattern where countries can export goods which a more efficiently produced, more eos.
- explains why developing countries often export primary goods (kenya)
- explains why developed countries export manufactured goods.services
Eval:
- strong assumption
- does not take into trade barriers>CA
Point 2: Other factors
- trading blocs (trade free)
- lower tariffs diagram
- nairobi-Mombasa infrastructure for trade
Eval: scarcity of resources/outside of blocs
What are the problems with a current account deficit
- Evaluate the view that strict rules and regulations on financial markets are essential to help create a more stable economy (25 marks)
Point 1:
- promote transparency reduce systematic risk
- higher liquidity and capital ratios reduces chance of illiquidity
- Dodd-frank act
- enhance market stability and investor confidence
Eval 1:
- stifle innovation
- high compliance costs
Point 2:
- Regulations can protect consumers from fraud and malpractice, ensuring fair market practices.
- consumer protection laws - banning of high interest rates
- consumer trust
Eval2:
- as long as consumers have info its ok
- may cause some banks to leave market reducing consumer welfare
Trump tariff good or bad for America
P1: Tarriff = lower surplus (diagram)
Eval 1: infant industries/job creation
P2: retaliation - higher costs for exporters (SRAS left and AD down)
Eval: Tarriff rev for public goods
