Economics: Theory and Practice, 10th Edition

CHAPTER 16

International Trade

CHAPTER OBJECTIVES

To present an overview of U.S. international trade by highlighting major U.S. exports and imports as well as major U.S. trading partners.

To explain the principle of comparative advantage.

To define free trade and explore some arguments in its favor.

To define protectionism, explore some arguments in its favor, and introduce the main tools for restricting trade.

To discuss possible trade policies and examine some key trade agreements.

Economic activity is highly globalized. In today's world, it is not unusual to hop a plane to do business in Singapore; for a middle-level corporate manager to work closely with subsidiaries around the world; or to furnish our homes with rugs, art, and furniture from Africa, South America, or Asia. One way to quickly see how globalized economic activity has become is to open your closet and scan the labels on your clothes showing where they were manufactured.

International economics is about the movement of goods and services as well as financial transactions among nations. Medical and disaster aid, military activity, overseas investments, and the import and export of goods such as oil, wine, grain, and automobiles are all relevant to international economics.

This chapter introduces some important topics that relate to international trade, or the movement of goods and services between nations. It ...