1. 1. What is the economic basis
for trade? Explain the underlying facts that support free trade and give an
example of a good that you purchased recently that is based on resource
differences. What are some examples of goods that the U.S. has comparative
advantage in producing? Take a look at the tag of the shirt/dress/pants you are
wearing today. Where was it made? Anyone wearing “Made in America” items of
clothing today? We sometimes hear people say “Buy American." Why don't we?
What is the basis of international trade? What are the benefits and the costs?
Under what conditions would you advocate for trade restrictions?
2. What is
happening to the value of the U.S. dollar these days? What causes the value of
the U.S. dollar to rise or fall? Who demands U.S. dollar? Who supplies U.S.
dollar? When we purchase German products, does our demand for euro go up or
down? What are freely floating exchange rates all about, and how do they work?
How can the falling U.S. dollar impact your travel expenses? Why would a cheap
dollar relative to other nations' currencies be good or bad for U.S.
trade?
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