The Whole Picture - Global Economics

Wow! It really is a small world – especially when countries work with each other to produce and supply the goods and services that everyone wants and needs.

If the U.S. can’t or won’t make a product because of ability or practicality, we have the option to import that product from another country. Each country and business produces those items in which it has a comparative advantage, which means that consumers end up with the best products at the lowest price.

Trade barriers hurt consumers by prohibiting trade with other countries. However, sometimes these barriers are necessary because of extreme political differences, or because we want to promote certain values and beliefs. Trade agreements can help countries work together to resolve differences and increase trade between them.

Finally, exchange rate markets enable countries to buy goods on the world market by establishing values for different currencies. These rates also play an important role in determining how cheap, or expensive a country's goods are on the world market, which can affect trade balances.

If you would like to play an interactive game where you experience the challenges and excitement of international trade, play Trading Around the World at the International Monetary Fund website.