man101_chp3

man101_chp3 - Why is global trade important to the United...

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Why is global trade important to the United States and how is it measured?
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1 U.S. exports a fifth of industrial production and a third of its farm products One of every sixteen jobs in U.S. is supported by exports U.S. businesses export over $731 billion in goods to foreign countries A third of U.S. corporate profits is from international trade and investment Exports accounted for one-third of U.S. economic growth
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Key Measures of International Trade 1 Balance of Payments Imports Exports Balance of Trade Exchange Rates
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Importing/Exporting Importing – purchasing of raw materials or finished goods from other nations Exporting – selling raw materials or finished goods to other nations
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Balance of Trade Total value of a nation’s exports minus the total value of a nation’s imports over a specified period of time
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Balance of Payments Total flow of money into the country minus the total flow of money out of a country over a specified period of time
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Trade Deficit Negative Balance of trade Buying more imports than exports Means the country has to export money to pay for its excess imports
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2 Why do nations trade?
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2 Absolute Advantage A country can produce and sell products at a lower cost A country is the only provider of a product Comparative Advantage A country should specialize in the products that it can produce most readily and cheaply, and trade these for goods that foreign countries can produce most readily and cheaply
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2 The Fear of Trade and Globalization Millions of Americans have lost jobs Millions fear losing their jobs Employers threaten to export jobs if workers do not accept pay cuts Service and white-collar jobs are vulnerable to operations move
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2 Benefits of Globalization Rise from poverty for foreign nations Per capita income increases Productivity and living standard increase Global competition keeps down prices, so Inflation is less threatening Open economy spurs innovation Export jobs may pay more
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3 What are the barriers to international trade?
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3 BARRIERS TO TRADE Nontariff Barriers Tariff Barriers Natural Barriers Major Obstacles Major Obstacles to to International International Trade Trade
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3 Tariffs versus No Tariffs Against Tariffs For Tariffs Protect infant industries Protect American jobs Aid in military preparedness Discourage free trade Raise prices
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This note was uploaded on 04/24/2008 for the course MAN 101 taught by Professor N/a during the Fall '07 term at Bay State.

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man101_chp3 - Why is global trade important to the United...

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