First, some definitions: then answer the questions below
dutiable imports: those imports that aresubject to a duty or tariff.
Exporting occurs when a good or servicecurrently in one country is provided to, and paid for by, an entityin another country. If Ford Europe ships cars to Ford NorthAmerica, it’s exporting. If a Chinese citizen studies at theUniversity of Washington in Tacoma, with tuition paid by her/hisparents in China, the US is exporting educational services toChina.
foreign direct investment (FDI): assets in onecountry (real estate, infrastructure, companies) that are largelyowned by an investor in another country.
gross domestic product (GDP): the value of allthings produced for sale within a specific territory (e.g., acountry) over a specific time period (e.g., a year).
merchandise trade: international movements ofphysical products.
tariff or duty: a tax onimported items, paid to the government of the importingcountry.
trade balance for a specific country over aspecific period of time: the value of all exports from that countryto all others was greater (trade surplus) or less(trade deficit) than the value of all imports tothat country from all others, over the specific period of time.
1. Did the US have a trade surplus or deficit in 2014? What wasthe absolute size of the surplus or deficit? What was the size ofthe surplus or deficit as a proportion of US GDP in 2014?
2. From Figure 1.1, how did each of the following events seem toaffect the trend in US exports, imports, and trade balance?
a) World War I (1914-18)
b) the Great Depression (1929-39)
c) World War II (1939-45)
d) the Great Recession (2008-9)
3. Identify three reasons why international trade has increasedas a proportion of US (or total world) GDP, from 1945 to thepresent. Use page 11 and pages 21-3.
4. Table 1.1 refers only to merchandise trade: each column sumsto 100% of US merchandise exports or imports. Why do you think”chemicals & manufactured goods” and “machinery & transportequipment” make up such a huge proportion of US exportsand imports? (There are several possible answers, and theyare only implied in the text, pages 13-21 — what do youthink?)
5. Table 1.1 does not include international trade in services.What kinds of services are traded internationally?
6. Why has “the value of foreign direct investment in the UnitedStates increased from 1 percent of GDP in 1960 to 16 percent in2013” [16]? Again, there’s more than one answer, and the text onlyimplies answers at this point — what do you think?
7. How does the iPhone illustrate the misleading nature ofinternational trade statistics?
8. Study Table 1.2. What proportion of US consumption is spenton motor vehicles? X proportion of that is spent onvehicles made in the US — what is X? If the rest of thoseexpenditures (call that Y percent) are on imported motorvehicles, what proportion is that? Why is the proportionin the “Import content” row different from Y?
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