Globalization of Trade

Question 1

Describe changes in U.S. international trade over the past 50 years.

Answer 1

Both U.S. imports and exports have grown dramatically over the past 50 years.

The U.S. is by far the world’s largest importer and one of the top three exporters.

Imports and exports each account for about 15% of purchases and output, respectively.

The U.S. exports only more agricultural products and services than it imports.

Question 2

Identify 5 factors that have facilitated or enabled an increased in global trade.

Answer 2

Reductions in trade barriers;

Increased economic integration between nations;

Regional trade agreements;

Development in communications (e.g., internet);

Development in the financial sector.

Question 3

The U.S. exports only more___ ___ than it imports.

Answer 3

agricultural goods

Question 4

For the past 50 years or so, ___ have accounted for an increasing proportion of all purchases in the U.S.

Answer 4

imports

Question 5

The U.S. ___ more goods than any other country.

Answer 5

imports

Question 6

Goods sold to a buyer in another country would be considered ___ to the seller.

Answer 6

exports

Question 7

During the past 50 years or so,___ ___ has grown faster than the rate of world-wide economic growth.

Answer 7

international trade

Question 8

Globalization of trade has been facilitated by reductions in ___ ___.

Answer 8

trade barriers

Question 9

International trade benefits who?

Answer 9

both the sellers and buyers of goods

Question 10

The proportion of U.S. output that is exported has ___ ___ for the past 50 years or so.

Answer 10

steadily increased

Question 11

Both U.S. imports and exports have ___ ___ over the past 50 years.

Answer 11

grown dramatically

Question 12

Who is by far the world’s largest importer and one of the top three exporters?

Answer 12

The U.S.

Question 13

Imports and exports each account for about ___% of purchases and output, respectively.

Answer 13

15%

Question 14

Identify 4 types of special costs associated with international trade that often are critical in determining the viability of such trade.

Answer 14

1. Transaction costs, including costs of using letters of credit and costs of mitigating currency exchange risk;
2. Transportation costs, the extra costs of shipping goods long distances and/or using more costly transportation methods;
3. Tariff and other compliance costs, including the direct costs of tariffs and complying with other requirements;
4. Time costs, the costs associated with the extra time due to distance and other requirements.

Question 15

Goods acquired from a foreign country would be considered ___ to the buyer.

Answer 15

imports

Question 16

The long-term trend has been for U.S. exports to ___ and for U.S. imports to ___.

Answer 16

decrease; increase.

Question 17

Define “globalization of trade”.

Answer 17

Globalization of trade : The exchange of goods and services between and among countries

Question 18

Define “import”.

Answer 18

Import: A good or service acquired from a seller in a foreign country.

Question 19

Define “export”.

Answer 19

Export: A good or service sold to a buyer in a foreign country.

Question 20

___ is now the largest export nation by a significant amount.

Answer 20

China

Question 21

U.S. imports of ___, ___, and ___ goods are greater than its exports of those items.

Answer 21

industrial, consumer and automotive

Question 22

U.S. exports of ___ and ___/___ goods, and services is greater than its imports of those items.

Answer 22

capital and agricultural/food

Question 23

What are “transaction costs”?

Answer 23

The costs associated with any transaction, but which will have additional elements in international transactions, including the additional costs of negotiating with suppliers and customers, using letters of credit, currency exchange, and hedging;

Question 24

What are “transportation costs”?

Answer 24

The cost of shipping goods from the point of production to the point of consumption, whether for goods sold (exports) or goods purchased (imports);

Question 25

What are “tariff and other restrictive costs”?

Answer 25

The direct cost of tariffs and the indirect cost of meeting standards or other requirements that may be unique to a country;

Question 26

What are “time costs”?

Answer 26

The cost of delays due to distance and inspection and other import/export functions.

Question 27

The long-term trend has been for U.S. exports to ___ and for U.S. imports to ___.

Answer 27

decrease; increase