Identify four key points from the reading assignments that were emphasized in the simulation The four key points emphasized in the simulation are; trade restrictions, tariffs, quotas, and trade negotiations. To arrive at trade restrictions a trade policy must first be created. A trade policy is a government policy; which directly influences the amount of goods and services a country is able to import and export (Mankiw, 2007). Tariffs are taxes placed on goods which are imported; just as quotas are placed on goods produced overseas, and sold here at home. Enforcing quotas when trading goods will eliminate the amount of foreign products sold in the United States; giving the U.S. the ability to compete and recover financially. For all of these steps to come together; the government officials must determine how the curve of demand will shift (Mankiw, 2007). Since, foreign countries will need to utilize U.S. currency to purchase U.S. goods and services; the demand curve could possibly shift in favor of the United States economy. In other words; the U.S. may make a profit and remain in the black during future trades. Also, the equilibrium must remain at a constant allowing the U.S. dollar to stay strong during trading of exports; and imports. For this to take place the U.S. dollar and exports become more expensive. Foreign exports will decrease in price, as the value of the U.S. dollar will increase in price. Governments are not affected by these changes in trade policy however; there are certain industries, firms, and countries.
References
Mankiw, N. G. (2007). Principles of economics (4th ed.). Mason, OH: Cengage Learning.