0
Rate this Study Guide:
☆☆☆☆☆A budget reveals the spending plan for the fiscal year, as well as the government's financial priorities and goals.
Speculators from rushing into and out of a country's market and disrupting its economy./
Rationing
Tariffs and embargos are trade restrictions.
Free-trade policies
Think that you're country A, wanting to buy pen and paper.
Country B produces 1 million pen and 1 BILLION paper
Country C produces 1 BILLION pen and 1 million paper
Or, country B has the absolute advantage over production of paper while
country C has the absolute advantage over production of pen.
Coming back our theory of economy of scale, we know that to a certain point, increased production would lead to lower average cost and thus, lower price.
This would mean that paper from country B is cheaper than country C whereas pen from country C is cheaper than country B.
Therefore, you would choose to trade paper with country B while trading pen with country C.
And this is why it is important to making economic choices.
Rationing is not an example of a trade restriction.
A restriction on when a union may call a strike
