Chap006 - The United States in the Global Economy CHAPTER...

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The United States in the Global Economy CHAPTER SIX THE UNITED STATES IN THE GLOBAL ECONOMY CHAPTER OVERVIEW This chapter introduces the basic principles underlying the global economy; a more advanced discussion of international economics follows in Part Eight. The growth of world trade, and the United States’ role in it, is examined first. The concept of comparative advantage is introduced as the basis for world trade followed by a discussion of foreign currencies and international exchange rates. Restrictive trade practices are examined, which leads to a discussion of multilateral trade agreements and free-trade regions of the globe. The chapter concludes with an update of how well U.S. firms are competing in an increasingly competitive global economy. WHAT’S NEW This chapter has been updated both in terms of the statistics as well as the institutional changes that have occurred in the global economy. Attention is given to the Doha Round of WTO trade negotiations that began in late 2001, and discussion of the euro has been updated. A new “Global Perspective” ranking the top 12 globalized nations, has been added. The previous edition’s “Last Word” (“Buy American: The Global Refrigerator”) has been replaced with “Petition of the Candlemakers, 1845.” A “Consider This” box illustrating exchange rates has been added (moved from the previous edition website “Analogies, Anecdotes, and Insights” section). New end-of-chapter (including web-based) questions have been added. INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to 1. Identify and give an example of the four types of flows that link the U.S. economy with the economies of other nations. 2. Describe the relative importance of U.S. exports of goods when compared to other industrialized countries and the position of the U.S. exports as a percentage of total world trade. 3. Describe the pattern of U.S exports and imports of goods and services since 1975 both in terms of percentage of GDP and absolute dollars. 4. Compare the dollar value of U.S. exports and imports of goods and the dollar value of U.S. exports and imports of services. 5. Name three of three principle U.S. imports and exports. 6. Identify the United States’ most important trading partner. 7. Explain the principles of comparative advantage, terms of trade, and gains from trade. 8. Explain how foreign exchange rates are determined and how a change in the international price of a currency can affect the price of exports and imports and the volume of exports and imports. 9. Describe four ways in which governments interfere with free trade among nations. 90
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The United States in the Global Economy 10. Describe the political reasons that cause governments to impose trade barriers. 11.
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This note was uploaded on 01/14/2012 for the course SPAN 2010 taught by Professor Austin during the Spring '11 term at Tennessee Martin.

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Chap006 - The United States in the Global Economy CHAPTER...

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