International Trade and United States

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nDr. Anyanwu, Eco 201: HW Solutions for Chapter 2
(Discussed in class on September 25):
Question 1
Describe the four major types of economic flows that link the United States with other nations. Provide a specific example of each type of flow. ANSWER:The four major economic flows are: the flows of goods and services (trade flows); the flows of capital equipment and labor (resource flows); the flows of information and technology; and the financial flows (money).

The financial flows provide the money necessary to pay for exports and imports. Question 2
How important is international trade to the U.S. economy? In terms of the total volume of exports and imports, what country is the United States’ most important trading partner? Was the United States the world’s leading export country in 2009? If not, which country was? Place the following four countries in descending order in terms of exports as a percentage of GDP: the United States, Belgium, Canada, and Japan. What key factors account for the rapid growth of world trade since the Second World War?  ANSWER:Exports and imports constituted 14 percent and 11 percent of GDP respectively in 2009. These proportions have more than doubled since 1975. The United States trades more with industrially advanced economies although the U.S. trade with Mexico is substantial. The U.S.’s most important trading partner quantitatively is Canada, buying 20 percent of our exports and providing 15 percent of our imports in 2009.

China was the leading export country in 2009, surpassing Germany which used to hold that position.

The order is: Belgium, Canada, Japan, United States.

Improvement in transportation technology; Improvement in communication technology; and Decline in tariffs & other trade impediments. Question 5
If the European euro were to decline in value (depreciate) in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States?...
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