When interest rates are high, investors receive more on their investments (such as bonds, bank saving etc.). When return is high, investors tend to invest far more money. Consumers will reduce their cosumptions. For example, buying a car, or house or financing an extravagant vacation trip. They in turn will use this money for investment purposes. With this, the investment capital increases. The exact opposite happens when interest rates are low. Investments are no longer attractive, and investors now will prefer spending the money, as they cannot really earn much anyway.
Your text, on page 629, lists three arguments for trade restrictions. Since economists do not favor trade restrictions, and this is a course in Managerial Economics, make the case as an economist against trade restrictions for these three items. Are there any arguments for trade restrictions that most economists would support? …show more content…
The first argument is in reference to anti-dumping; which is to prevent anti-competitive action by competitors of foreign territories. Economists will accept this because the action of large foreign firms can distort or somewhat confuse the home market. Dumping tends to drive out the local competition which means that foreign companies can then raise prices higher resulting in the exploitation of their consumers. In the second argument, trade restrictions should be imposed to protect newly orginated industries from foreign competition. Economists already know that the long term average cost curve slopes down initially till the point is reached when the marginal cost curve cuts the average cost curve. When the average cost remain high if infant industries are exposed to foreign competitors who are large and have lower costs, the infant industries will be out competed and forced to close down.
Who was responsible for the global financial crisis of 2007-2009? Free-Market capitalism, government intervention, or a combination of both? Identify the causes of the crisis, the steps the private and public sector took to resolve it, and what leaders should do to keep it from happening again. Remember, banks are profit making firms who supply capital to suppliers of goods and