Final Exam Chapter 20, 21 Flashcards
How have US exports and imports changed since 1980?
U.S. exports and imports have more than doubled as percentages of GDP since 1980
Trade Deficit
Occurs when imports exceed exports. The US has a trade deficit in goods. In 2012, US imports of goods exceeded US exports of goods by $735 billion
Trade Surplus
Occurs when exports exceed imports. The US has a trade surplus in services like air transportation and financial services. In 2012 US exports of services exceeded imports of services by $196 billion
Principal US Exports
Chemicals, agricultural products, consumer durables, semiconductors, aircrafts.
Principal US Imports
Petroleum, automobiles, metals, household appliances, metals, computers
Who is the US’s most important trading partner, quantitatively?
Canada is US’s most important trading partner quantitatively. In 2012 about 20% of US exported goods were sold to Canadians. Canada provided about 15% of imported US goods
US Trade Deficit with China
US has a sizeable trade deficit with China. As of 2012 the deficit was $315 billion
US Dependence on Oil
US has a dependence on foreign oil. In 2012 the United States imported $181 billion of goods (mainly oil) from OPEC members, while exporting $82 billion of goods to those countries.
US Global Exporting and Importing Volume
US leads the world in terms of combined volume of exporting and importing. China, US, Germany, Japan, and the Netherlands were the top 5 exporters by dollar in 2012.
US Global export percentage
US provides about 8.1% of the worlds exports.
US output percentages
Exports of goods and services make up about 14 percent of total US output. This percentage is much lower than many other nations, like Canada, France, Germany, and the Netherlands.
3 Reasons Trade is Beneficial
- Distribution of goods among nations is uneven.
- Nations have different efficiencies required for production of goods.
- Quality of products may change based on nation, those goods may be preferable.
Labor-Intensive Goods
China is able to produce efficiently a variety of labor-intensive goods: Textiles, electronics, apparel, toys, and sporting goods.
Land-Intensive Goods
Australia has vast amounts of land and can inexpensively produce land-intensive goods: Beef, wool, and meat.
Capital-Intensive Goods
The US and Germany have relatively large amounts of capital can inexpensively produce goods with production requiring much capital: Airplanes, automobiles, agricultural equipment, machinery, and chemicals.
Absolute Advantage
A country is said to have absolute advantage over other producers of a product if it is the most efficient producer of that product.
Efficiency of Production
A nation can produce a product with the most efficiency if it can produce more output of that product from any given amount of resource inputs than any other producer.
Comparative Advantage
A country is said to have comparative advantage over other producers of a product if it can produce the product at a lower opportunity cost than other producers.
(Can produce goods at a cheaper cost)
Opportunity Cost of Production
A country must forego less output of alternative products when allocating productive resources to producing the product in question
Terms of Trade
The exchange ratio;
The terms of trade determine whether a country can “get a better deal” by specializing and trading than it would self sufficient wise.
Trading possibilities line
Shows the amounts of the two products that a nation can obtain by specializing in one product and trading for another.
Gains from Trade
The additional goods that can be acquired by specializing and trading for two different goods as opposed to producing both goods.
World Price
The price that equates the quantities supplied and demanded globally.
Domestic Price
Determined by domestic supply and demand: The price that would prevail in a closed economy that does not engage in international trade. The domestic price equates quantity supplied and quantity demanded domestically.
