Question

1) for a high tax society the disposable income of people will decline and so will be there saving and investment, in this kind of a society the government expenditure will crowed out the private investment as the rate of interest will be high. in this society the poor people will be benefited the most from the public expenditure but the richer class will be burdened. in case of a low tax society the disposable income f people will be higher as well as there saving and investment. this kind of society will prosper early because private investment leads to profit and further investment in the society. which ultimately leads to employment generation and income flow. one demerit of this society is that the poor people will suffer as the expenditure by government on basic services like health and education will be low. 2) if international trade id prohibited then consumer of the US will be in loss but the producers will earn profit as there is no other sources the consumer can get that from. if a free trade aggrement is signed with china and great bretain the US will be able to import wheat from china for 3$ and that will increase consumer welfare. and the country can export wheat to great britain as there production cost is higher than US and the producer of wheat in US will be benefited the most from it. if us imposes a 3$ tariff on import from china the price of wheat imported will be much higher than the price before trade so in this case the producer of wheat in US will be more benefitted because the import will decline. if a 3$ subsidy is given to the producer of wheat in great britain the production cost of wheat will decline and that will make them an efficient producer of wheat. in this case us will become an importer of wheat rather than an exporter and as there is free trade agreement between the two both the country will be benefitted from the trade. Question : the arguments could be made against international wheat trade, from the perspective of U.S. producers. (you do not need to provide an answer for each of the four scenarios, you only need to consider the outcomes of international trade that are detrimental to U.S. producers? what arguments could you make for international wheat trade, from the perspective of U.S. consumers? Please typing the Answers more than 400 words, and giving references.

Answer 1

1)if there will be free trade between US and china the producers of wheat in US economy will be at loss.this will happen because the production cost of wheat in US is higher than in china and if there will be free trade wheat will be available to US consumer in a low price and the consumer will prefer the low price of wheat so the producers will be at loss. so free trade is like a curse to producers of wheat in US.

2) from consumers point of view, free trade is like a blessing because trade will make the price low for them and there surplus will increase. if consumers buy from the local producers they will have to pay more than the imported products so consumers will go for the imported wheat rather than local production.