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Unformatted text preview: Chapter 37 - International Trade CHAPTER THIRTY-SEVEN INTERNATIONAL TRADE CHAPTER OVERVIEW This chapter builds on Chapter 5, providing more analysis of international trade and protectionism. First, it reviews important facts about world trade. Second, it examines how international specialization based on comparative advantage can mutually benefit participating nations. Third, supply and demand analysis is used to help students understand prices and quantities of imports and exports. Fourth, the economic impact of trade barriers is examined, followed by the arguments for protectionism. Finally, the chapter discusses the costs of protectionism and some continuing international trade controversies. INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1. Summarize the importance of international trade to the U.S. in terms of overall volume. 2. List the major imports and exports of the United States. 3. State two economic points that explain why nations trade. 4. Compute, when given appropriate data, the relative costs of producing two commodities in two countries and determine which nation has the comparative advantage in each good. 5. Compute, when given appropriate data, the range for the terms of trade. 6. Calculate the potential gains from trade and specialization for each nation and the world when given appropriate data. 7. State the economists case for free trade. 8. Explain the relationship between world prices and American export supply curve, and the relationship between world prices and American import demand curve. 9. Explain international equilibrium price and quantity using a two-nation market model for import demand and export supply. 10. Identify four types of trade barriers. 11. Describe the economic impact of tariffs, including both direct and indirect effects. 12. Contrast the economic impact of a quota with that of a tariff. 13. List seven arguments in favor of protectionist barriers, and critically evaluate each. 14. Identify the costs of protectionist policies and their effects on income distribution. 15. Describe the major provisions of the WTO, and explain why some protest against the WTO. 16. Explain how trade adjustment assistance is used to mitigate harmful effects of world trade. 17. Define and identify terms and concepts listed at the end of the chapter. LECTURE NOTES I. Learning objectives In this chapter students will learn: A. The graphical model of comparative advantage, specialization, and the gains from trade. 37-1 Chapter 37 - International Trade B. How differences between world prices and domestic prices prompt exports and imports. C. How economists analyze the economic effects of tariffs and quotas....
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This note was uploaded on 07/27/2010 for the course ECON 0453 taught by Professor Dongwahu during the Spring '09 term at Shoreline.
- Spring '09