Chapter 17 "International trade", after reading this chapter, you should be able to: Summarize . trade patterns, explain how trade increases total output, tell how the terms of trade are established, discuss how trade barriers affect market outcomes, describe how currency exchange rates affect trade flows. | Chapter 17 International Trade Trade Balances Imports: goods and services purchased from foreign sources. Exports: goods and services sold to foreign buyers. 17- Imports are purchased here but made in another country. Exports are made here but purchased in other countries. Trade Balances Imports and exports are seldom equal. The trade balance is the difference between exports and imports: Trade balance = Exports – Imports 17- In recent years, the . is experiencing a trade deficit, meaning that imports are greater than exports. We can buy more from them than they can from us because our income allows us to. Trade Balances Trade deficit: the amount by which the value of imports exceeds the value of exports in a given time period. Trade surplus: the amount by which the value of exports exceeds the value of imports in a given time period. 17- A trade deficit is the opposite of a trade surplus. Table 17- Notice that we actually do manufacture goods in the . and still sell a lot of goods abroad. The . is still one of the largest manufacturers in the world. Motivation to Trade Specialization increases total output. The gain from trade increases world output and thus generates a higher standard of living in both countries. Consumers in both countries gain more choice and can buy at lower prices. 17- Trade benefits countries by increasing the total output of goods and services in the world. More wants and needs can be satisfied in both countries. Production and Consumption Possibilities Consumption possibilities: the alternative combinations of goods and services that a country could consume in a given time period. No trade? A country’s consumption possibilities must equal its production possibilities. International trade breaks the link between production possibilities and consumption possibilities. 17- Consumption possibilities represent the choices of goods and services that a country is able to consume. . | Chapter 17 International Trade Trade Balances Imports: goods and services purchased from foreign sources. Exports: goods and services sold to foreign buyers. 17- Imports are purchased here but made in another country. Exports are made here but purchased in other countries. Trade Balances Imports and exports are seldom equal. The trade balance is the difference between exports and imports: Trade balance = Exports – Imports 17- In recent years, the . is experiencing a trade deficit, meaning that imports are greater than exports. We can buy more from them than they can from us because our income allows us to. Trade Balances Trade deficit: the amount by which the value of imports exceeds the value of exports in a given time period. Trade surplus: the amount by which the value of exports exceeds the value of imports in a given time period. 17- A trade deficit is the opposite of a trade surplus. Table 17- Notice that we actually do manufacture goods in .
