Global Trade and Economic Interdependence

The exchange of goods and services creates economic interdependence among peoples in different places.

China is the largest exporter of goods to the United States.

U.S. exports to China have decreased since China joined the World Trade Organization in 2001.

Every country produces everything it needs to survive without depending on other countries.

Imported goods allow Americans to access products they wouldn't otherwise have.

Comparative advantage is the main reason countries trade with each other.

Comparative Advantage refers to the ability of a country to produce a good at a relatively higher cost than another country.

Specialization can lead to a country producing more of a good than it can consume.

Factors of Production that can contribute to Comparative Advantage include natural resources, labor, and capital.

Tariffs are taxes on exported goods imposed by the importing country.

Quotas are restrictions on the amount of foreign goods that can be exported by a country.

The European Union is an organization that promotes free trade among independent European nations.