RSM100Y1 Lecture Notes - Lecture 5: Absolute Advantage, Comparative Advantage, User Friendly
Document Summary
Adam smith suggests that the government should use monetary policy and focus on infrastructure and so on to stimulate economy during recessions and depressions instead of putting trade restrictions. Now, there is a general belief around the world thinking trade is beneficial. As trade becomes more and more common, the movement of globalization appears, e. g. eu. However, there are even trade/labour disagreements between provinces in. Apec - asia pacific economy community: working on reducing tariffs and barriers. Tariffs: tax on selling imported goods than domestic produced goods, i. e. selling cloth made in china requires 10% tax on the total profit. Tariffs stand to reduce the benefits of trade but increases profit for government. Tariffs slow economy - rate of wealth creating goes down. Canadian softwood lumber - canada has competitive advantages: sell softwood to us for house construction; (also sell it to japan for temple construction)
