Everything Depends on Everything Else

1
Everything Depends on Everything Else
2
Everything Depends on Everything Else

• Can an import tariff on fertilizer in the Ukraine
  affect the price of cotton in India and the price
  of chicken in the United States?

3
Increase or Decrease?

• A severe drop in fertilizer use, caused by an
  import tariff in Ukraine, the so-called
  bread-basket of the former USSR, will
  ___________ the quantity of wheat available to
  Ukraine.

decrease
4
Increase or Decrease?

• If the government of Ukraine then buys wheat from
  U.S. grain dealers, the price of U.S. wheat will
  ___________. This will __________ the cost of
  flour to U.S. millers and __________ the cost of
  bread in U.S. grocery stores.

increase
increase
increase
5
Increase or Decrease?
increase

• It will also __________ the cost to India of
  purchasing wheat from the U.S., which will
  ___________ the demand in India for domestically
  produced wheat and ___________ its price.

increase
increase
6
Increase or Decrease?
increase

• This will __________ the demand for land by
  Indian wheat growers and thus __________ the cost
  of growing cotton on land that is also suitable
  for wheat production.

increase
7
Increase or Decrease?
decrease

• This will ___________ the quantity of cotton
  produced, __________ the price of cotton, and
  __________ the cost of purchasing cotton
  clothing. This will ___________ the demand for
  wool.

increase
increase
increase
8
Increase or Decrease?

• Meanwhile back in the U.S., the demand for land
  suitable for wheat production will __________,
  which will __________ the cost of growing feed
  grain for cattle.

increase
increase
9
Increase or Decrease?
decrease

• This will ___________ the quantity of cattle
  grown and cause beef prices to __________. This
  will increase the demand for chickens.

increase
10
Increase or Decrease?
A fertilizer tariff reduces the Ukraine wheat
crop. Ukraine buys wheat from the U.S. driving
up the price of U.S. wheat. That increases the
price of wheat India buys from the U.S. That
drives up demand and price of Indian wheat. The
higher price encourages Indian farmers to plant
wheat instead of cotton. This reduces the amount
of Indian cotton grown and pushes up the
domestic price of cotton products thereby
increasing the demand for wool products. Wheat
production increases in the U.S., increasing the
cost of producing grain for beef production. The
higher-priced beef at U.S. stores increases the
demand for chicken.