End of Unit Test Reflection

Ms. Q,

I feel that I could have studied more for this test – I came in without knowing much about comparative advantage and other components of the test. Honestly I surprised myself with an 80%. It seems like I had most trouble with the diagrams and definitions, because I hadn’t studied. The evaluation I was able to do because I understood the concept of a trading bloc and the stakeholders of the situation. I could refine my evaluation however, to get a higher grade. Thank you for grading my test!

Statistical Analysis of Niger

The income per capita of Niger is estimated at $245, which is very low compared to the world. In addition, income is unequal, characterized by the GINI coefficient at 50.54.

The population growth rate is at 2.878%, ranked at 18 out of 235 countries. The dependency ratio is more than 1:1, as there are 109 people supported by 100 people.

The unemployment rate is not listed for Niger.

Niger’s export value is $428 million, while Japan’s is $65 billion. In addition, all of their exports are commodities, which include uranium ore, livestock, cowpeas, and onions. Also, 90% of their population is employed in agriculture.

Health -

The crude death rate is 20 people, while the life expectancy is at 44 years at birth. The physicians per 1000 people is 0.03. In other words, there are 3 doctors for every 100,000 people.

Using an appropriate diagram, explain who gains and who loses from the introduction of a tariff.

1. Demands of the question: A diagram of the tariff is required. This question wants the student to evaluate the effect the introduction of a tariff has on stakeholders. Identification of the people who gain and lose. It includes domestic producers, international producers, the government, and domestic consumers. This question will take 20 minutes because it is Paper 2.

2. Definitions:

Tariff: Tariffs are taxes on goods imported into a country. They are a form of protectionism and are often used by governments to try to reduce the level of imports into a country.

3. Triple A Textbook:

Tariffs

A tariff is a tax on imports, which can either be specific (so much per unit of sale) or ad valorem (a percentage of the price of the product). Tariffs reduce supply and raise the price of imports. This gives domestic equivalents a comparative advantage. As such, tariffs are distorting the market forces and may prevent consumers from gaining the benefit of all the advantages of international specialisation and trade. The impact of a tariff is shown in Figure 1 below.

Figure 1 Impact of a tariff

The tariff has the effect of shifting the world supply curve vertically upwards by the amount of the tariff. The level of imports will fall from QaQd to QbQc. The government will also raise revenue, shown by the blue shaded area. The level of domestic production will increase from 0Qa to 0Qb.

4. Powerpoint Slides

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5. Diagrams

6. Evaluation Suggestions

Since this question is, in essence, an evaluation question, I would examine the stakeholders of the situation in order to evaluate the introduction of a tariff. The relevant stakeholders are mentioned in step 1: domestic producers, international producers, the government, and domestic consumers.

Hope might be in sight for the UK: The Marshall-Lerner Condition and the J-Curve

The article about the UK’s unexpected widening of its trade gap has not realized the Marshall-Lerner condition. The formula for this condition is the PEDex + PEDimp (Price Elasticity of Demand) > 1.

The article states that although there was a devaluation of the pound, exports have remained at a measly 1% increase, while imports have increased by 5%. If exports in the UK were elastic, then a small devaluation of the pound would bring about a large increase in quantity of exports. Meanwhile the devaluation of the pound would decrease imports as the price of buying foreign currencies increases. In reality, however, the demand for imports may possibly be fairly inelastic, as a small devaluation of the pound has increased imports by 5%. On the other hand, the small devaluation of the pound has only increased the quantity of exports by 1%.

How I did on my DBQ (via Harmeets Econ Blog)

Cool.

My data response was a lot better than I expected. Seeing as in my practice DBQ I found some of the questions really hard I find my high 6 very rewarding. I understood the diagrams much more in this assignment. The part I fell through was the actual descriptions of the demand and supply graphs, If I talked about the price and quantity directly that would have resulted in a better grade. In part d my organization and lack of evaluation stopped me … Read More

via Harmeets Econ Blog

Current Account Surplus: The Netherlands

The historical trend of the current account in the Netherlands has been in surplus since 1980. After 2002, there is a steep incline in current account balance until 2008.

The graph on the left shows the current account balance of the Netherlands, which clearly shows the historic trend of being positive.

The current account surplus of the Netherlands as a percent of GDP is at 7.96%.

DBQ Reflection

I thought I did pretty good on this DBQ. I left out minor details about trade disputes in the evaluation in which I lost points. I could have gained a point in one of the diagram sections if I had only talked about price in the tariff diagram. Overall my score was 18/20, 95%.

Thoughts on Free Trade and Protectionism

Free trade is rare in the current global situation, and there is a lot of protectionism that happens around the world. However, I think that free trade is the road to an increase in global welfare. Countries trade internationally in order to better world welfare. For example, when a country specializes in a good that has a comparative advantage over another country, it increases global welfare. By allowing free trade, countries can freely trade while specializing in their comparative advantage. This will contribute to an increase in global welfare. In comparison, protectionism is aimed more at preserving the welfare of a country’s firms. By imposing subsidies on local firms and quotas on imports, domestic firms will be empowered, which is counteractive to the increasingly globalizing world today.

As a real world example, the EU is a great example of a successful free trade union. The countries that are part of the EU allows for the free expansion of economies spread across the nations of the EU.

Danger Zone Reflections

Problems I had doing my essay questions last year consist of imprecise use of economic terminology, ineffective evaluation, and lack of explanation about economic relationships. This basically means that I have problems with my knowledge of economics – I should study more before taking the actual test. My main problem is the ineffective evaluation. I have avoided the other danger zones sometimes, but the evaluation seems to be my biggest problem.

The President’s Dilemma

Problem based learning (PBL) allowed for us to come up with our solution to the economic problem. It allowed us to analyze data better, and understand quite well what our tasks are and how we can achieve them. If we had just been given the problem and asked to solve it without the steps that are part of PBL, we probably would not have been able to see the links between each policy.

In our presentation, the one weakness we had not addressed was the outsourcing of workers to foreign countries. We had made the assumption that the problem was based solely in the United States. However, outsourcing of workers would mean poorer quality workers, especially if in less economically developed countries (LEDCs). Therefore, we thought it better to give additional training to the workers here in the United States, increasing productivity and aiding the economy.