Matthew_McCoy_Week_3_Chapter_37_Assignment

Matthew_McCoy_Week_3_Chapter_37_Assignment - Matthew McCoy...

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Matthew McCoy ECON201 Week 3 Chapter 37 Assignment June 22, 2011 Professor John Volpe 1. Quantitatively, how important is international trade to the United States relative to the importance of trade to other nations? What country is the United States’ most important trading partner, quantitatively? With what country does the United States have the largest trade deficit? The United States’ exports are about thirteen percent of GDP, which is small relative to other industrialized nations, including Canada, France, Germany, the Netherlands, and South Korea. The United States leads the world in combined volume of exports and imports (measured in dollars). Canada is the United States’ most important trading partner quantitatively. In 2009 about twenty percent of U.S. exported goods were sold to Canadians, who in turn provided fifteen percent of imported U.S. goods (McConnell, Brue, & Flynn, 2011, p. 755). The United States has a sizable trade deficit with China. In 2009 it was $220 billion 3. Explain: “The United States can make certain toys with greater productive efficiency than can China. Yet we import those toys from China.” Relate your answer to the ideas of Adam Smith and David Ricardo. The United States can make toys more efficiently than can China, but it would also cost more to produce. Adam Smith’s idea basically states “Never attempt to make at home what will cost you more to make than to buy. If a foreign country can supply us with a commodity cheaper than we can make it, better buy it of them with some part of the produce of our own industry,
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Matthew_McCoy_Week_3_Chapter_37_Assignment - Matthew McCoy...

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