Chapter 35 Outline

Chapter 35 Outline - CHAPTER 35 LECTURE NOTES I. II. III....

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CHAPTER 35 LECTURE NOTES I. Learning objectives – In this chapter students will learn: A. The graphical model of comparative advantage, specialization, and the gains from 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. D. The rebuttals to the most-common arguments for protectionism. E. About the assistance provided workers under the Trade Adjustment Act of 2002. F. How the offshoring of U.S. jobs relates to the growing international trade in services. II. Facts of International Trade: Highlights A. The U.S. has a trade deficit in goods (exports exceed imports); in 2005 the trade deficit in goods was $782 billion. B. The U.S. has a trade surplus in services ($58 billion in 2005). C. The principal exports of the U.S. include computers, chemicals, semiconductors, consumer durables, and agricultural products. Its main imports are petroleum, automobiles, computers, and metals. D. The U.S. exports many of the “same” goods it imports. (Intra-industry trade) E. Canada is the United States’ quantitatively most important trading partner (24% of U.S. exports; 17% of U.S. imports). F. The U.S. had a $202 billion trade deficit with China in 2005. G. U.S. dependence on foreign oil is reflected in its $94 billion trade deficit with OPEC nations in 2005. H. The U.S. leads the world in the volume of exports and imports. Germany is the world’s top exporter; U.S. exports of goods make up about 9% of the world’s exports. I. U.S. exports of goods and services (on a national income account basis) comprise 11% of total U.S. output. J. Although the U.S., Japan, and western Europe dominate world trade, there are emerging nations around the world that collectively generate substantial international trade such as South Korea, Taiwan, Singapore and China. China exported an estimated $762 billion in 2005, making it a major player in international trade. K. International trade and finance link economies. Economic change in one part of the world has repercussions for countries around the globe. L. International trade and finance is often at the center of U.S. economic policy. III. The Economic Basis for Trade A. International trade is a way nations can specialize, increase the productivity of their resources, and realize a larger total output than they otherwise would. B. Two points amplify the rationale for trade. 1. The distribution of economic resources among nations is uneven. 2. Efficient production of various goods requires different technologies or combinations of resources. 3. Products are differentiated among nations and some people prefer imports. C.
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This note was uploaded on 06/13/2011 for the course ECON 2252 taught by Professor Byrd during the Spring '11 term at Troy.

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Chapter 35 Outline - CHAPTER 35 LECTURE NOTES I. II. III....

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