Imports and Exports
Examine Annex I of the President's 2007 Annual Report on the Trade Agreements Program. (To view this document, the free Adobe Acrobat reader plug-in must be installed in your browser, if you do not have this, you may download it from here.)
Questions:
- Did imports and exports grow faster or slower than U.S. GDP since 1970?
- Why did U.S. imports rise in 2006?
- What happened to the trade deficit in 2006? Why?
- How might the widespread use of the internet affect international trade?
Solutions:
- Imports and exports expanded substantially faster than GDP during this period.
- U.S. imports rose in response to economic growth in 2006.
- The trade deficit rose because U.S. exports increased less rapidly than U.S. imports (largely in response to relatively high U.S. GDP growth)/
- The widespread use of the internet would also be expected to increase international trade by providing a low cost source of information on product pricing and availability. The transaction cost associated with ordering products is also substantially reduced by the existence of the internet.
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