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Impact of Protectionist Policy on Macroeconomic Stability: A Case Study of United States and Australia

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Added on  2023-06-05

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This paper analyzes the impact of protectionist policy on macroeconomic stability of United States and Australia. It discusses the recent protectionist measures taken by Donald Trump and its likely consequences on the economy. The paper also evaluates the welfare analysis of protectionist policy.

Impact of Protectionist Policy on Macroeconomic Stability: A Case Study of United States and Australia

   Added on 2023-06-05

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Running head: ECONOMICS FOR BUSINESS
Economics for Business
Name of the Student
Name of the University
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Impact of Protectionist Policy on Macroeconomic Stability: A Case Study of United States and Australia_1
1ECONOMICS FOR BUSINESS
Table of Contents
Introduction......................................................................................................................................2
Analysis...........................................................................................................................................2
Stability in macroeconomic equilibrium.....................................................................................2
Protectionist policy and its impact on United State.....................................................................3
Protectionist policy and its impact on Australia..........................................................................4
Welfare analysis of protectionist policy..........................................................................................6
Conclusion.......................................................................................................................................7
Reference list...................................................................................................................................8
Impact of Protectionist Policy on Macroeconomic Stability: A Case Study of United States and Australia_2
2ECONOMICS FOR BUSINESS
Introduction
Trade protectionism measures refer to form of policies aiming to restrict unfair
competition generated from foreign nation. Protectionist policy is generally a defensive measures
motivated politically. One common method of implementing protectionists measure is to impose
tariff or tax on import. Direct impact of this policy is to raise the price of imported goods.
Second way is to provide subsidy to local industries. Government now a day imposes a quantity
restriction or import quota as an effective measure of protection (Helpman & Razin, 2014). The
interventionist measures taken by the government affects macroeconomic stability of an
economy. The paper discusses recent protectionists policy measure taken by Donald Trump and
its likely consequences on economy of United State and Australia.
Analysis
Stability in macroeconomic equilibrium
Figure 1: Stable macroeconomic equilibrium
(Source: as created by Author)
Impact of Protectionist Policy on Macroeconomic Stability: A Case Study of United States and Australia_3

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