For Professor Ryan

“Comparative advantage can explain why people pursue different occupations. It can also explain why countries produce different goods and services. International trade involves many countries importing and exporting many different goods and services. Countries are better off if they specialize in producing the goods for which they have a comparative advantage. They can then trade for the goods for which other countries have a comparative advantage” (Hubbard, R. G. & O’Brien, A. P., p. 277, 4th edition). Based on your knowledge of comparative advantage, look at U.S. exports and imports. Note that we both export and import some of the same products.  If specialization is the essence of comparative advantage, why would we import and export the same product categories?

 

(2)
Identify the capital resources for the country you selected for your term paper (Phillipines).  Are the machinery, equipment, and processes outdated?  What would a firm need to do to ensure production efficiency, if anything at all? What is its balance of trade and balance of services?  How will these figures impact firms.  Explain, using the tools of economic analysis to support your thoughts.

 

(3)

Aggregate demand involves the purchasing actions taken by consumers, businesses, governments, and the spending by U.S. and foreign firms and U.S. and foreign consumers. At this time, we know that consumers and firms are spending very little in the United States and around the world. Should governments in the United States spend more, increasing our debt, to compensate for the minimal spending we see by consumers and the private sector?  (Keep in mind that our current national debt is $16 trillion.  This comes to a debt of $52,209 per person in the United States and $145,787 per U.S. taxpayer.)   If indeed governments spend more, will the jobs created be permanent or temporary? Support your thoughts using the tools of economic analysis.

 

(4)

What actions has the Federal Reserve taken to try to pull the United States out of this economic down turn? Have these actions worked? Should the FED just print money and try to stimulate the economy? How would this action impact the potential for inflation?  In the same respect, what actions has the federal government taken to stimulate the economy?  What else can it do?  Will these actions work?  Discuss and support using the tools of economic analysis.