The importance of an international trade to US and its most importing trading partner.
Explanation of Solution
International trade is the trading relationship between nations without borders. The international trade is such that the import and export of goods and services take place between the nations. The international trade allows the country to focus on the production of goods and services in which, they have the
The importance of the international trade in the case of US, can be identified by looking into the share of the international trade in the US
The most important or the major trading partner of US is Canada. They were exporting 15 percent of the US imports and importing 20 percent of the US exports in the year, 2012. The easy access to markets and the lower transportation distance, all that helped the two top countries to become the major trading partners.
China was known to be the country with which, US had the largest
Concept introduction:
International trade: It is the trade between nations beyond borders. The market is open to the domestic players as well as the foreign players.
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Chapter 20 Solutions
MACROECONOMICS(LL)
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- Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 5 cans tuna fish Tunata: 1 can baby formula ≡ 7 cans tuna fish a. In what product should each nation specialize? Canswicki should produce _____- , and Tunata should produce _____ b. Would the following terms of trade be acceptable to both nations? i. 1 can baby formula ≡ 4 cans tuna fish: yes or no ii. 1 can baby formula ≡ 8 cans tuna fish: yes or no iii. 1 can baby formula ≡ 5.5 cans tuna fish: yes or noarrow_forwardSuppose that the price of a commodity is 3 50 in Suppose that the price of a commodity is $3.50 in the United States and €4 in the European Monetary Union and the actual exchange rate between the dollar and the euro is R = $1/€1, but, the equilibrium exchange rate R′ = $0.75/€1. (a) Will the United States import or export this commodity? (b) Does the United States have a comparative advantage in this commodity? Suppose that the price of a commodity is 3 50 inarrow_forward12. If the free trade price is lIP and this country imposes a trade tariff of $3, what will be the resulting net welfare loss to the economy? a)$3 b)$27 C)$13.5 d)$40.5 e)$9 13. if the free trade price is IP and this country imposes an import quota of 6 units, what will be the welfare loss to this economy? a)$3 b)$27 c)$13.5 d)$40.5 e)$18arrow_forward
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- What is an export parity price? Give an export parity price for a specified commodity. (starting with the f.o.b price)arrow_forwardSuppose Big Country can produce 80 units of X by using all its resources to produce X or 60 units of Y by devoting all its resources to Y. Comparable figures for Small Nation are 60 units of X and 60 units of Y. Assuming constant costs, in which product should each nation specialize? Explain why. What are the limits of the terms of trade between these two countries? How would rising costs (rather than constant costs) affect the extent of specialization and trade between these two countries?arrow_forwardAssume the United States is a large consumer of steel, able to influence the world price. Its demand and supply schedules are respectively denoted by Dus and Sus in Figure 42. The overall (United States plus world) supply schedule of steel is denoted by Sus.. Figure 4.2. Import Tariff Levied by a Large Country 8 550 475 450 325 0 5 10 O $450, 5 tons, 60 tons, 55 tons O $475, 10 tons, 50 tons, 40 tons O $525, 5 tons, 60 tons, 55 tons 20 O $630, 30 tons, 30 tons, 0 tons 30 40 Consider Figure 4.2. With free trade, the United States achieves market equilibrium at a price of Sus 50 55 Sus W.1 Sus+ w Dus Tons of Steel At this price, of steel are produced by U.S. firms, are bought by U.S. buyers, and are imported.arrow_forward
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