by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
Who Demands and Supplies Currency in a Foreign Exchange Market? In foreign exchange markets, demand and supply become closely interrelated, because a person or firm who demands one currency must at the same time supply another currency—and vice versa. To get a sense...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Economic Unions? An economic union is a type of trade block composed of common market and a customs union.The participant countries have both common policies on product regulation, freedom of movement of goods, services and the factors of production (capital...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Unsafe Consumer Products Argument for Restricting Imports? One argument for shutting out certain imported products is that they are unsafe for consumers. Consumer rights groups have sometimes warned that the World Trade Organization would require nations...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Environmental Protection Argument for Restricting Imports? The potential for global trade to affect the environment has become controversial. A president of the Sierra Club, an environmental lobbying organization, once wrote: “The consequences of...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Anti-Dumping Argument for Restricting Imports? Dumping refers to selling goods below their cost of production. Anti-dumping laws block imports that are sold below the cost of production by imposing tariffs that increase the price of these imports to...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are Non-Tariff Barriers? Nontariff barriers are all the other ways that a nation can draw up rules, regulations, inspections, and paperwork to make it more costly or difficult to import products. A rule requiring certain safety standards can limit imports just as...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How do Economies of Scale Lead to Trading Advantages? A second broad reason that intra-industry trade between similar nations produces economic gains involves economies of scale. The concept of economies of scale means that as the scale of output goes up, average...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Splitting Up the Value Chain? Specialization in the world economy can be very finely split. In fact, recent years have seen a trend in international trade, which economists call splitting up the value chain. The value chain describes how a good is produced in...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Opportunity Costs relate to International Trade? Both parties can benefit from specializing in their comparative advantages and trading. By using the opportunity costs it is possible to identify the range of possible trades that would benefit each country....
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Comparative Advantage give rise to Mutually Beneficial Trade? When nations increase production in their area of comparative advantage and trade with each other, both countries can benefit. Again, the production possibility frontier is a useful tool to...
