International Trade Simulation and Report Essay

1428 Words Feb 25th, 2011 6 Pages
International Trade Simulation and Report International trade is the exchange of goods, capital, and services across international borders or territories. In most countries this trade represents a significant share of their (GDP) gross domestic product. This type of trade has political, economic, and social importance to all nations involved. There are many factors surrounding international trade, such as, advantages, limitations, foreign exchange rates, and others. As we review these factors, this will allow us to better understand how international trade truly functions.
Advantages and Limitations International trade is based on having a comparative advantage. Countries produce products that are easier for them to produce, then
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1). China has been found guilty of being a currency manipulator but President Obama administration has backed away from confrontation them over the issue. (R. Glenn Hubbard & O’Brien, 2010). According to R. Glenn Hubbard and O’Brien (2010), ‘”By illegally subsidizing its exports through the undervaluation of its currency by 30 percent or more, China distorts the gains from trade, creates barriers to free and fair trade, harms the US industries, and has destroyed millions of US jobs’”. China has been twisting its financial information to gain more, and the action of China is a clear example of anti-dumping, therefore a quota should be placed on China for all of its imports until the country shapes up. “A quota is a limit on the quantity of a good that can be imported.” (R. Glenn Hubbard & O’Brien, 2010, p. 1013). But since China is a major creditor to the U.S., it seems nearly impossible for there to be any action of major proportions. Trade restrictions have been known to happen; an example of this is the trade barrier against Cuba. Miller (n.d.), " When the government of Country "A" puts up trade barriers against the goods of Country "B", the government of Country "B" will naturally retaliate by erecting trade barriers against the goods of Country "A". The result are, a trade war in which both sides loose, but all

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