Chapter_3 - Chapter 3 International Trade: What is...

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Chapter 3 International Trade: What is international trade? It is business across borders Why trade internationally? A lot of items are here from other places. Free trade: International business, without government interference Comparative trade advantage: - A country should export products it produces efficiently. - A country should import goods it cannot produce efficiently Absolute trade advantage: - Think monopoly. 1500s, silk trade. Only China had silk, so people would travel All over the world to try and find is. Nobody could compete. Measuring international trade: - Balance of trade: o Good: Exports exceed imports(selling more than your buying) o Bad: Imports exceed exports. (Buying more than you sell) - Balance of payments: o Good: more money is coming in than going out o Bad: more money is going out than coming in. *United States has bad balance of trade, and bad balance of payments. *Innovation keeps our nation afloat. We can out produce other nations
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This note was uploaded on 04/22/2008 for the course OLS 274 taught by Professor Goodrich during the Spring '07 term at Purdue University-West Lafayette.

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Chapter_3 - Chapter 3 International Trade: What is...

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