Describe the four major economic flows that link the U.S. with other nations. Provide a specific example to illustrate each flow.
2. How important is international trade to the U.S. economy? In terms of volume of exports and imports, what country is the United States’ most important trading partner? Was the United States the world’s leading export country in 2012? If not, which country was? Place the following four countries in descending order in terms of exports as a percentage of GDP: the United States, Belgium, Canada, and Japan. What key factors account for the rapid growth of world trade since the Second World War?
3. What role do domestic opportunity costs play in determining a nation’s area of comparative advantage and therefore specialization relative to that of a trading partner? Provide a numerical example (no need for a table) to support your answer. How does specialization and trade reduce a nation’s total cost of obtaining products? Why is specialization sometimes incomplete, such that countries import some of the same categories of goods that they export?
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