Comparative Advantage, Exchange Rates and International Trade

Globalization is becoming a very important topic in economic discussions. While some politicians favor protectionist policies because they feel these policies protect domestic producers, others claim free trade increases economic activity and has advantages for the country as a whole. Comparative advantage dictates which good or service a particular region specializes in and exports to other regions.

 

Discussion Checklist:

 

  1. Do you think it is better to source from overseas or should tariffs be in place to protect American industries? Why?
  2. List one good or service that your home region specializes in and where it exports this good. Why is your region particularly good at the production of that good or service?
  3. What are the impacts of an exchange rate system on exports and imports?