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In economics, the Metzler paradox (named after the American economist Lloyd Metzler) is the theoretical possibility that the imposition of a tariff on imports may reduce the relative internal price of that good. [1] It was proposed by Lloyd Metzler in 1949 upon examination of tariffs within the Heckscher–Ohlin model. [2]
Terms of trade (TOT) is a measure of how much imports an economy can get for a unit of exported goods. For example, if an economy is only exporting apples and only importing oranges, then the terms of trade are simply the price of apples divided by the price of oranges — in other words, how many oranges can be obtained for a unit of apples.
An economic theory that defines wealth by the amount of precious metals owned. [48] business cycle. Also called the economic cycle or trade cycle. The downward and upward movement of gross domestic product (GDP) around its long-term growth trend. [49] The length of a business cycle is the period of time containing a single boom and contraction ...
This graph makes it clear that the real terms of trade decreases when the growth rate is higher in the South than in the North (because, thanks to unity in elasticity of demand, the export line would shift to the right faster than the import line). The resultant decrease in the terms of trade, however, means a lower growth rate for the South.
This theory was suggested initially by the author Ian Bremmer, in his book The J Curve: A New Way to Understand Why Nations Rise and Fall. The x-axis of the political J curve graph measures the 'openness' of the economy in question and the y-axis measures the stability of that same state.
The graph depicts an increase (that is, right-shift) in demand from D 1 to D 2 along with the consequent increase in price and quantity required to reach a new equilibrium point on the supply curve (S). A common and specific example is the supply-and-demand graph shown at right.
In a direct-import program, the retailer bypasses the local supplier (colloquial: "middle-man") and buys the final product directly from the manufacturer, possibly saving in added cost data on the value of imports and their quantities often broken down by detailed lists of products are available in statistical collections on international trade ...
M (imports) represents gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic. C, I, and G are expenditures on final goods and services; expenditures on intermediate goods and services do not count.