Answer to Question #319955 in Macroeconomics for tani

Question

1. You are asked to advice government on a policy consideration. The policy being considered is in effect looking to ban the importation of chicken into the country. 

Present a paper on your advice on this policy action.

Your paper should reflect: 

1. Intended and untended consequences of this policy action
2. Necessary integrations in other sectors necessary for this policy implementation
3. Short run and long run impact on economic growth, unemployment, inflation and BOP

Answer 1

Imports are foreign goods and services bought from another country. when imports exceed export it creates a trade deficit which means that the country must borrow from other countries to pay for extra imports. by imposing total ban, the government intends to: create trade surplus, be independent on political and economic powers by promoting local producers. Excess imports leads to increase in inflation and high interest rates. this is because the government will be forced to increase their foreign currency which affects domestic currency value.

ban on imports eases competition on domestic producers, they will be forced to produce more to meet the demand which leads to increased level of employment. for the country to fully implement this policy, it should consider the use of advanced technology in local manufacturing of chicken foods and hatching of chicks to occupy the demand anticipated. use of advanced technology will ensure that more chicken are produced to meet the the demand