ECON 219 Lecture Notes - Lecture 22: Currency Board, Economic Surplus, Deadweight Loss
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ECON 219 Full Course Notes
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Currency board story was about how central banks when badly managed, alter prices, allow inflation to proceed. Not so much pure inflation the problem (that all prices would be rising equally) Modern inflation various sets of prices, change at different rates & these alterations in the structures of prices are creative of allocative problems. Today is the story about tariffs, subsidies, and quotas government produced alterations in the prices of goods & these alterations diminish the efficiency of the outcomes. What we will be able to do when talking about this things, is show exactly deadweight loss (something we will experience in all of these cases, as prices get screwed up) No effect on world availability of the product. Cant go above the world price (that which is supplied) On the bottom line, that is the amount we import (before tariffs). Once we add a tariff, that horizontal line shifts upwards.
