International Trade
Free and open trade are deemed to be beneficial to all countries
involved, but international trade requires the use of foreign currencies.
-
The World
Trade Organization went into effect in 1995, replacing and simultaneously
including its predecessor, the General Agreement on Tariffs and Trade,
that went into effect in 1947. What is the purpose (are the purposes) of
the WTO?
-
The WTO claims to promote “world
peace.”
How
does the WTO feel that it promotes world peace?
-
How does the WTO lower the cost
of living?
-
The WTO says that free trade increases
income.
By how much do economists estimate that cutting trade barriers in agriculture,
manufacturing and services by one third will boost the world economy?
By how much have incomes
in Europe increased in the 1989–93 with the European Union compared to
the amount they would have increased without the Single Market?
Is China a member of the WTO?
If so, in what year did it become a member of the WTO?
What, if any, countries
became members of the WTO in 2004?
-
Use the currency convertor to determine
the exchange rate of three foreign currencies relative to the U.S. dollar.
Show these currencies and their exchange rates below.
1.
2.
3.
-
Now answer the following questions about international trade that come
from the Mcconnell Web site.
Chapter 38 (Macro 21, Micro 25) Web-Based Questions
-
38-15 Web-Based Question
The U.S. Census provides the latest data on U.S. trade in goods and
services in U.S.
International Trade in Goods and Services—Latest Figures
Over the past year, has the trade balance in goods and services improved
(that is, yielded a smaller deficit or larger surplus) or deteriorated?
The major U.S. trade strength is in which category: goods or services?
The largest increases in exports were in what products?
The largest increases in imports were in what products?
-
38-16 Web-Based Question
The Yen/Dollar Exchange Rate and Trade Deficits The Japanese yen/U.S.$
exchange rate is determined by market forces and changes frequently.
A key determinant of exchange rates is a trade deficit or a trade surplus.
Other things equal, if the United States has a trade deficit with Japan,
the dollar should depreciate relative to the yen.
The Federal Reserve Board of Governors Foreign
Exchange Rates—Historical Data provides yen/dollar exchange rates for
the last decade.
Trade data can be found under Exports,
Imports, and Balance of Goods by Selected Countries.
Select a time period, and compare the U.S. trade deficit with Japan
with the yen/dollar exchange rate during that period.
Do the data support the theory?
What other factors might be influencing the yen/dollar rate?
Copyright ©1999 The McGraw-Hill Companies. All rights reserved. Any
use is subject to the Terms of Use and Privacy Policy.
McConnell
Web site
Economic Links
My Homepage
ECO 212
Last updated November 19, 2004
Send comments to:
jbremer@oakton.edu