Trade barriers are policies or regulations that inhibit international trade, or the trade of goods and services between countries. For example, tariffs are taxes on imports or exports, which make international goods more expensive. Import quotas restrict the number of a specific good that can be brought into a country. Most economists believe that trade barriers decrease overall economic efficiency but may benefit certain groups.
Labor market issues include unemployment rates, minimum wage levels, worker safety regulations and immigration policies. Many of these issues involve a trade-off of costs and benefits. For example, raising minimum wage benefits some workers, but it may also increase unemployment.
Externalities refer to a good or service's costs and benefits to other people. For example, smoking cigarettes causes negative externalities: Nonsmokers breathe second-hand smoke, have polluted air and have to pay higher health care costs. Vaccinations incur positive externalities because people who have not been vaccinated are less likely to get sick. Policymakers can encourage or discourage externalities through taxes and subsidies. For example, taxing cigarettes makes them more expensive, decreasing consumption. Providing free vaccinations encourages people to get vaccinated.
Fiscal policy refers to government spending and revenue collection. Governments typically collect revenue through taxation, borrowing money or printing money. Monetary policy refers to the government or central bank's control of a country's supply of money. Monetary policy aims to adjust interest rates and slow the rate of inflation.