Welcome to EC 382 International Economics By Dr Jacqueline Khorassani Week Nine 1 Week Nine Class 1 Tuesday October 30 14 10 15 00 AC 202 I have newly graded assignments here please pick them up 2 What is antidumping law A law that does not allow an international firm to sell its product in an export market for less than it is sold for in its home market Most countries have it 3 What is countervailing duty A tariff imposed by a country that is designed to increase the price of the imported good by an amount equal to any export subsidies Most nations have this too 4 Attention my dear students You must know everything in this Chapter on GATT and WTO 5 Pay attention to Table 8 3 Multilateral Trade Round Dates Tariff Cuts of Countries Major Negotiation Pre GATT 1931 1947 33 2 23 Tariffs First Round 1947 21 1 23 Tariffs Second Round 1949 1 9 13 Tariffs Third Round 1950 1951 3 0 38 Tariffs Fourth Round 1955 1956 3 5 26 Tariffs Dillion Round 1961 1962 2 4 26 Tariffs Kennedy Round 1964 1967 36 0 62 Tariffs ag and dumping Tokyo Round 1974 1979 29 6 99 Tariffs and NTBs Uruguay Round 1987 1994 38 0 125 Tariffs services agriculture Millennium Round 1999 Aborted Doha Round 2001 142 See text for details Source Data adapted from R P Lavergne 6 Assignment Due Class one next Tuesday November 6 Needs to be typed It has 20 points You work on this alone No duplicates Duplicates receive zero marks 7 Question 1 Visit the WTO s web page at wto org to answer the following questions a Is Iran a member of WTO How about Iraq b Which country is the newest member of WTO c Is the following statement true or false Explain WTO is for free trade at any cost d Is the following statement true or false Explain The voting power of a nation that is a member of WTO depends on its GDP e What was the size of the WTO s budget last year 8 Question 2 Search the web or elsewhere for at least Two examples of countervailing and or antidumping duties imposed by Ireland or Europe in the recent years Name the products and their exporting countries and the nature of the imposed duties Clearly list your sources 9 CHAPTER 11 National Income Accounting and the Balance of Payments 10 What is national income accounting The process used to keep track of GDP and its components What does GDP measure A country s total output per a unit of time A country s total income per a unit of time Total output measured in country s currency with goods services measured at market prices 11 What is excluded from GDP 1 Intermediate goods Only final goods services are included Why 2 Non reported market transactions and activities Informal economy Shadow economy To avoid multiple counting Mostly to avoid paying taxes or following other regulations Illegal goods GDP is understated and provides a conservative estimate of country s total economic activity 12 What is the difference between nominal and real GDP Nominal GDP The value of GDP in current prices Real GDP The value of GDP in base year prices How do they relate to each other Real GDP in year t Nominal GDP in year t 100 Price Index in year t 13 What are the components of GDP Y C I G X M Y GDP total production total income C Public s consumption of goods and services I private business firms investment in equipment software structures and changes in business inventories and residential investment G The purchase of goods and services even investment goods by government X Exports of goods and services M Imports of goods and services 14 Ireland s Real GDP in millions of source Central Statistics Office Ireland http www cso ie 15 International Economics Week Nine Class 2 Wednesday October 31 11 10 12 00 Tyndall 16 Don t forget the Assignment Due Class one next Tuesday November 6 Needs to be typed It has 20 points You work on this alone No duplicates Duplicates receive zero marks 17 Question 1 Visit the WTO s web page at wto org to answer the following questions a Is Iran a member of WTO How about Iraq b Which country is the newest member of WTO c Is the following statement true or false Explain WTO is for free trade at any cost d Is the following statement true or false Explain The voting power of a nation that is a member of WTO depends on its GDP e What was the size of the WTO s budget last year 18 Question 2 Search the web or elsewhere for at least Two examples of countervailing and or antidumping duties imposed by Ireland or Europe in the recent years Name the products and their exporting countries and the nature of the imposed duties Clearly list your sources 19 Are second hand sales in GDP No GDP measures the value of newly produced goods and services only 20 Irish Nominal GDP components in 2006 millions of source Central Statistics Office Ireland 21 Flow Stock Variables Stock Is measured at a given point in time Flow Is measured per unit of time 22 What are these variables flow or stock GDP Price index Exports Unemployment rate 23 What is X M equal to X M is net exports or the trade balance exports of goods and services minus imports of goods and services Y C G I X M X M Y C I G Trade Balance domestic production supply domestic expenditures demand 24 If Y C I G X M Trade deficit Our income production supply is less than our expenditures demand or we produce less than we consume domestically We are borrowing from foreigners flow or stock Our international indebtedness increases flow or stock 25 This means that in the future Deficits must be paid by producing more than consuming exporting future consumption Trade deficit is the process of importing present consumption and exporting future consumption 26 If Y C I G X M Trade surplus Our income production is more than our expenditures or we produce more than we consume domestically We are lending to foreigners flow or stock Our international indebtedness decreases flow or stock 27 This means that in the future our domestic production will be less than our expenditures importing future consumption 28 Trade imbalances denote a country s preference for present versus future consumption Intertemporal Trade Countries trading production for consumption at different points in time 29 Production and Income We know that GDP C I G X M Y We also know that Y T C S This means that C I G X M T C S I G X M T S I G X T S M 30 Injections and leakages I G X T S M The left side items are all expenditures on domestic output create income in the country injections in the income stream The right side items are all monies not …