Take a minute and look around. You might be
surprised to discover how
many of the everyday items in your life are made
overseas. Your shirt
might be made in China. Perhaps your stereo was
assembled in Japan. The watch you're wearing could
be from Switzerland. And yes, the shoes that you are
sporting might have been assembled in the United
States.
The importing and exporting of goods is big business
in today's global
economy. When goods are produced in one country and
sold in another,
international trade occurs. It is so common to find
items produced
worldwide that people rarely even think about it.
Not too long ago, countries consumed goods
predominately produced within their borders. As
transportation has become increasingly less
expensive and telecommunications have improved,
international trade has flourished.
In general, international trade allows countries to
focus on the industries in which they can be most
productive and efficient. In this way, trade often
raises the standard of living of both producers and
consumers. International trade also has a dark
side.
This SparkNote will address many of the questions
about international trade that are probably looming
in your mind. Why should countries
trade? How does trade work? What is the effect of
international trade? How do exchange rates affect
trade? Can the government interfere in free trade?
What is the trade deficit?
The benefits and
pitfalls of trade affect the economy at its core.
Everything from
output to standard of living to interest rates
remains under the partial
control of international trade. By understanding
international trade, we will uncover one of the most
important real life applications of macroeconomics.
