Effects of monetary policy on the money supply essays

Effects of monetary policy on the money supply essays U.S. Faces Tariffs In Response To Trade Dispute This article posted in The Wall Street Journal on Thursday the 18th of November discusses how in response to the highly criticized Byrd amendment the European Union has announced plans to impose a set of punitive tariffs on several U.S. products in the coming year. The Byrd amendment, which has been in place four years, is legislation that provides for protection for U.S. companies who believe a foreign company is selling products in the U.S. at prices lower than those in the home market by imposing tariffs on such goods. The primary problem with the amendment is that the U.S. offers revenues generated from these tariffs to Companies in the U.S. who complain of the foreign dumping. The World Trade Organization has thus claimed the amendment illegal due the fact that U.S. companies are receiving double benefits both from protection from the tariffs and revenues benefited from such tariffs. The new tariffs proposed by the EU will be on almost 80 products ranging from textiles to heavy machinery. The tariffs are meant to be more symbolic than financially crushing. I felt that the best way to apply this article to the models we discussed in class was to represent the tariff using our model of large country market equilibrium and the imposition of a specific tariff. The graphs on the following page represent the effects the tariffs will have both in the U.S. and the European Union Countries. In the following model, Sfx represents the supply schedule for foreign exports and Dm represents the demand for imports, E is the point of equilibrium. An imposition of a simple tariff will cause for the supply of foreign exports (Sfx) to decrease and shift to the left. The new supply of foreign exports is now parallel to the old but above it at each quantity by the amount of the tax. This in turn raises the market equilibrium from E to E, which means that consumers are now forced to...