Question

If it often said that good policies require sound understanding of economics and for international policy making in a highly integrated world sound international macroeconomics knowledge is critical. Assume the trade war is happening and Australia (your country) is caught up in it. Briefly discuss what Australia should or could do to maintain or improve its economic performance.

Answer 1

Trade war refers to a situation in which countries try to damage each other's trade relations by stringent protectionist policies .Tariffs quotas are levied to hamper trade relations . If Australia is caught up in such a trade war , the foremost target should be to maintain the exchange rate and balance of payments . Dumping should be prohibited . Australia being a developed country can provide subsidies to domestic producers to procude more . This can help it to become self sufficient and not engage in any sort of trade . Australia can also change its trading partners .