What is the economic theory behind the theory of trade?
Students learn about:
Trade, financial flows and foreign investment
• the basis of free trade – its advantages and disadvantages
• role of international organisations – WTO, IMF, World Bank, United Nations, OECD
• influence of government economic forums – G20, G7/8
• trading blocs, monetary unions and free trade agreements
– advantages and disadvantages of multilateral (EU, APEC, NAFTA, ASEAN) and bilateral
agreements
Australia's trade and financial flows
Value, composition and direction of Australia’s trade and financial flows
• trends in Australia’s trade pattern
Students learn to:
Trade, financial flows and foreign investment
• the basis of free trade – its advantages and disadvantages
• role of international organisations – WTO, IMF, World Bank, United Nations, OECD
• influence of government economic forums – G20, G7/8
• trading blocs, monetary unions and free trade agreements
– advantages and disadvantages of multilateral (EU, APEC, NAFTA, ASEAN) and bilateral
agreements
Australia's trade and financial flows
Value, composition and direction of Australia’s trade and financial flows
• trends in Australia’s trade pattern
Students learn to:
- analyse statistics on trade and financial flows to determine the nature and extent of global interdependence
- assess the impact on the global economy of international organisations and contemporary trading bloc agreements
Why do we trade?
How much time do you think Thwaites spent building his toaster? How long do you think it would have taken Thwaites to earn enough money to buy a toaster?
Advantages and disadvantages of free trade
Free trade means to trade without any conditions, such as quotas, tariffs or subsidies. It has its advantages and disadvantages, but there are winners and losers of globalisation.
Read more from The Economist:
Read more from The Economist:
ECONOMISTS have long argued that free trade makes everyone richer. But lately that view has come under attack, most notably from President Donald Trump. Economists are asking themselves some tough questions. Is free trade always a good thing? Do the losers from free trade need to be compensated?
The Economist, May 4th, 2018
Why it should work: comparative advantage.
Nobel laureate Paul Samuelson said that comparative advantage is one of the few ideas in economics that is both "true and not obvious". Since it's not obvious, we should practise understanding how it works.
How will you show you have learned this?
- Watch “The Theory of Comparative Advantage” (12:04 mins). Complete the exercise in the clip.
- Answer the two practice questions.
- Watch Comparative Advantage 2 (5:03 mins). Check your response for the exercise in the first clip.
Show what you now know:
In the following scenario, determine the opportunity cost of each worker. Who has the absolute advantage at each task, and who has the comparative advantage?
Protection
Use this handout courtesy of Nick Ward to look at protection:
● reasons for protection – infant industry argument, domestic employment, dumping, defence
● methods of protection and the effects of protectionist policies on the domestic and global
economy – tariffs, subsidies, quotas, local content rules, export incentives
And learn to examine economic issues
●Discuss the effects of protectionist policies on the global economy
● reasons for protection – infant industry argument, domestic employment, dumping, defence
● methods of protection and the effects of protectionist policies on the domestic and global
economy – tariffs, subsidies, quotas, local content rules, export incentives
And learn to examine economic issues
●Discuss the effects of protectionist policies on the global economy
| 01._economics_-_protection.pdf |