Question

International Trade

1. For each of the following cases for limiting international trade, briefly explain the rationale for limiting trade and provide a possible counterargument supporting international trade.

1. National security requires that we produce strategically important goods ourselves.

2. Protection can help infant industries grow.

3. Trade shouldn’t be used to avoid environmental and safety regulations.

4. Foreign competition leads to job losses.

2. In 50-150 words, explain which arguments you find most compelling—the arguments against international trade or the arguments in favor of international trade.

Unemployment

1. Explain whether each of the following events increases, decreases, or has no effect on the unemployment rate and the labor-force participation rate.

1. After being laid-off from her job, Josephine Allen finds a new job.

2. John Church immediately began hunting for a job after his graduation in May 2020, but has had no success finding a job.

3. After a long unsuccessful job search, Alina Turk decides to move to Hawaii to live on the beach.

4. Jose Martinez quits his job to homeschool his children.

5. Olivia Nembrajhal celebrates her 16th birthday, but has no interest in working.

6. Joyful Freedman contracted the COVID-19 virus in her work as an emergency room physician and has been sick at home the past month.

2. In 50-150 words, explain why unemployment matters.

Answer 1

International Trade

International trade is the exchange of goods and services across international boarders or territories according to the demand of goods and services. International trade has a dominant role in the Gross Domestic Products (GDP) of those countries who participate in international trade. It includes exports and import of goods.  

Advantages of International Trade

Countries can focus on producing goods which are most suitable for its economic capacity, technological ability and the area in which their work force is skilled with.  

It also helps countries to acquire high quality goods with affordable price to satisfy their needs.

In order to facilitate international trade the participating countries will sign agreements, which helps technologically backward countries to access advanced technological skills.

It also helps to promote overseas employment opportunities.

Disadvantages

International trade always creates a tendency of over depending on other countries for each goods and services.

Because of the long distance, the transportation and communication is very difficult, and it will only help to get goods and services at a higher price, compared to our local production.

High amount of risk and uncetainities can be expected.

Existence of Documentation and payment related difficulties.

Lack of understanding of foreign markets makes international trade more difficult.

In case of developed nations free trade is not a problem, on the other hand developing countries concerned, promoting international trade will destroy the demand of locally produced goods, and there by the people has to lose their livelihood. In any country, where import increases and export decreases will  create trade deficit and the country will reach economically backward.

While considering international trade three things are very important. They are :

i. availability of goods

In certain countries, if certain goods are not available, international trade can be promoted if the demand for the product is that high.

ii. Price of the goods

Another factor which we have to take into consideration is price of the goods. Price of one unit of a particular item is very much depended on its cost of production. That is factors of production. in Certain places sometimes man power or labour charge is very less and raw materials need to have to import from far away places, naturally thecost of production will be less. Under such circumtance import or promoting international trade is more profitable.

iii. Quality of goods

In certain places wecan see products which are available maintaing high standards. This is another reason for promoting international trade.

International trade between different countries helps to improve the living standrads of people, it provides employment opportunities and also helps people to enjoy a variety of goods having international quality with affordable price.

International trade promotes imports which affects existing small scale industries. It creates job loss for those group of people who less educated, or illitarate, people who are below poverty line, who does not have any other skill or knowledge to compete with any other market situation other than the tradional one which they were familiar all through their life.