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Chapter 9: Problem 4

Briefly explain whether you agree with the following statement: "Japan has always been much more heavily involved in international trade than are most other nations. In fact, today Japan exports a larger fraction of its GDP than Germany, the United Kingdom, or the United States."

Short Answer

Expert verified
The response is entirely dependent on current and accurate economic statistics. The statement can either be agreed or disagreed with based on the results of our calculations.

Step by step solution

01

Defining Terminology

Define GDP and understand that it encompasses the total value of goods produced and services provided in a country. Define international trade as the exchange of goods and services between countries.
02

Research Data

Research credible sources to gather up-to-date export and GDP figures for Japan, Germany, the UK, and the US.
03

Calculate the Export to GDP Ratios

For each country, divide the total export figures by the GDP figures to get the export to GDP ratio. This figure represents the proportion of a country's GDP that is made up from exports.
04

Compare Ratios

Compare the export to GDP ratios of Japan, Germany, the UK and the US to see whether Japan exports a larger fraction of its GDP.
05

Formulate Answer

Based on the results from the previous steps, formulate a response to the exercise's statement. Agree or disagree, and provide the supporting figures.

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Most popular questions from this chapter

Hal Varian, chief economist at Google, made the following two observations about international trade: 1\. Trade allows a country "to produce more with less." 2\. "There is little doubt who wins [from trade] in the long run: consumers." Briefly explain whether you agree with either or both of these observations.

Why might a smaller country, such as the Netherlands, be more likely to import and export larger fractions of its GDP than would a larger country, such as China or the United States?

The United States produces beef and also imports beef from other countries. a. Draw a graph showing the demand and supply of beef in the United States. Assume that the United States can import as much as it wants at the world price of beef without causing the world price of beef to increase. Be sure to indicate on your graph the quantity of beef imported. Assume that the world price of beef is lower than the U.S. price. b. Now show on your graph the effect of the United States imposing a tariff on beef. Be sure to indicate on your graph the quantity of beef sold by U.S. producers before and after the tariff is imposed, the quantity of beef imported before and after the tariff, and the price of beef in the United States before and after the tariff. c. Discuss who benefits and who loses when the United States imposes a tariff on beef.

In 2017 , shortly after President Trump took office, the U.S. Department of Commerce considered imposing tariffs on European steel companies it accused of dumping steel on the U.S. market. An article in the Wall Street Journal quoted Secretary of Commerce Wilbur Ross as asserting, "A healthy steel industry is critical to our economy and manufacturing base, yet our steel industry today is under assault from foreign producers that dump and subsidize their exports." What is dumping? If the United States imposes tariffs on imports of steel from Europe, briefly explain who is likely to gain and who is likely to lose.

What is the difference between absolute advantage and comparative advantage? If a country has an absolute advantage in producing a good, will it always be an exporter of that good? Briefly explain.
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