Global Economy: Trade Protectionism, Foreign Exchange Market, Trade and Factor Mobility Theory, Global Supply Chain

GLOBAL ECONOMY

Table of Contents
Trade Protectionism.........................................................................................................................3
Question 1....................................................................................................................................3
Question 2....................................................................................................................................3
Question 3....................................................................................................................................3
Question 4....................................................................................................................................4
Market for Foreign Exchange..........................................................................................................4
Question 1....................................................................................................................................4
Question 2....................................................................................................................................5
Trade and Factor Mobility Theory..................................................................................................5
Question 1....................................................................................................................................5
Question 2....................................................................................................................................6
Global Supply Chain........................................................................................................................6
Question 1....................................................................................................................................6
Question 2....................................................................................................................................6
REFERENCES................................................................................................................................1

Trade Protectionism
Question 1
The government restrict trade in order to develop domestic industries. If domestic industries
fail to compete with the foreign industries, then government restrict trade. Example of trade
restriction is tariffs and import quotas. On the other hand, to increase economic welfare and
reduce overall trade cost, the government enhance international trade. It is also help the workers
and businesses to create and grasp new economic opportunities (Sigler and et.al., 2021).
Example of enhancing trade is free trade agreement of EU with the other countries forming part
of EU.
Question 2
The potential effect of government intervention on the free flow of goods that it is one of
main way of domestic trade protectionism. For this, the government basically uses the tariff and
non-tariff trade barriers instrument. It is also helps in addressing the inefficient allocation of
resources in the market and protect domestic industry from foreign. The actual effect sometime
create loss to the economy such as lack of incentives, resources etc. because of high government
intervention. The local companies face difficulty in obtaining cheap resources from the other
countries along with the highly talented workforce because of government intervention on the
free flow of trade.
Question 3
The four primary and major tools with the help of which the government of country can
regulate and restrict trade are as follows:
 Tariffs: This is a tax or duty which is paid on the certain class of imports and exports of
goods and services. This is basically designed to distort international trade and enhance
domestic products.
 Subsidies: This tool state that every recipient required to meet the export target set by
government or have to use domestic products rather than imported goods from foreign
country.
 Quotas: This is also known as import quota where the government set the target on the
quantity imported into a country over a particular period of time (Sigler and et.al., 2021).