Question

What are trade agreemengs?

What are the impacts of trade agreements on international trade?

Is Buy American flawed or economically rational? Why?

Answer 1

Q.1 What are trade agreements ?

Answer: Trade agreements is a bilateral agreements (i.e between two countries ) or Multilateral agreements ( i.e between more than two countries ).

Trade agreements includes duties such as import duty, tariffs and other agreements that directly affect imports and exports between domestic country and other countries, and thereby affect international trade.

Q.2 What are the impacts of trade agreements on international trade?

Answer: Trade agreements directly affect international trade, as we know trade agreements are associated with determining duties on imports from other countries, tariffs related measures and agreements which affect international trade. In free trade agreements, tariffs are removed which lead to lower prices of imported goods, and thereby benefits consumers of domestic economy. but at the same time it adversely affect domestic businesses and industries. where as, some domestic industries get new markets due to free trade agreements.

So, there is some positive as well as some adverse impacts of trade agreements on international trade.

Q.3  Is Buy American flawed or economically rational? Why?

Answer:  As we know economically rational means consumer maximizes his utility. As far as, Buy American is concerned, it might not be economically rational. Because some consumer not find himself as economically rational. It does not mean that, Buy American is not good for all the people.It is possible that the price of American product/parts are higher than price of imported product/parts.so, it makes difficult for less income people to buy such products.