The rules of the game for international trading

1. Look at Maps 2.1 (Top Merchandise Importers and Exporters) and 2.2 (Top Service Importers
   and Exporters). Compare the global position of the United States in merchandise versus service
   imports and exports.
   a. Does the United States have an advantage globally in either merchandise or services?
   Does it have an advantage in both? If it has any type of advantage, is it absolute or
   comparative? Or does it have a disadvantage in both? Explain your answers.
   b. Imagine that you were asked to give reasons why you think it is good, from the US
   perspective, to have its position among the countries of the world as the top importer
   in both merchandise and services. What reasons would you mention?
2. Looking at Maps 2.1 and 2.2, given the size of US exports, why does the United States import so
   much? Why not use resources in the US to produce the things the US currently imports instead
   of using them to produce exports?
3. Mercantilism involved a relatively significant amount of government control over both domestic
   and international activity, whereas Smith’s concept of absolute advantage focused on relative
   economic freedom and minimal government controls over domestic and international economic
   activity. Do you think that the values prevalent in American culture today are more in line with
   those of the mercantilists or those of Smith? If there is some combination of Smith and
   mercantilism, which tends to be dominant?
4. The rules of the game for international trading can be quite complex, so why do nations
   routinely engage in this activity?

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