01:220:103 Chapter Notes - Chapter 18: Corn Laws, Export Subsidy, Absolute Advantage
Document Summary
Trade surplus - the situation when a country exports more than it imports. Trade deficit - the situation when a country imports more than it exports. United states has begun to run deficits since 1970s. Believe that domestic jobs are lost - can"t compete with cheaper foreign goods. Issue of free trade: debate in british parliament. Corn laws - the tariffs, subsidies, and restrictions enacted by the british. Parliament in the early nineteenth century to discourage imports and encourage exports of grain. Keep rich rich and price of food high. Had to pay workers a living wage, which depended on the price of food. Theory of comparative advantage - ricardo"s theory that specialization and free trade will benefit all trading partners (real wages will rise), even those that may be absolutely less efficient producers. Enables countries to specialize in producing the products they produce.
