Eco212 International Trade Simulation Report Essay

International Trade Simulation
ECO 212
March 20, 2012

 
International trade is the exchange of goods, services, and capital across international lines or into territories, which represent the significant share of the Gross Domestic Product or GDP for short. International trade is vital to any economy. During the early 1900s when congress decided to cut off international trade, the result was a crash in the stock markets causing the great depression. And advantage of international trade is efficiency, a country is able to allocate and utilize their resources to produce goods in which they have a comparative advantage over other countries. When a country is able to produce through comparative advantage they are able to reduce the duplication of the same resource allowing other countries to use the same resource in a more efficient way for their country. A limitation during the simulation was when the tariff was put in place. Putting a tax on imported goods causes to reactions, the first reactions is business importing a good with a tax on it now has to pay an import tax which reduces the amount they import, at the same time limiting the import allows the country that it is imported from to have a chance to export that good to another country allowing more trade relations with other countries.
There were four points that were emphasized in the international trade simulation. The first was that it is a good choice when negotiating free trade agreements, to try an negotiate between more than one country allowing a more open trade availability. When there is more trade with more countries there is an increase in the amount of products available, with more products a variety is available to the public. With an economy having mor products available it allows for more demand, and that demand causes more spending allowing the economy to grow. The second point that was made during the simulation was to know which commodities to import. If a country is a leader in...