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1、WorldTradeandInternationalTradeIntoday’scomplexeconomicworld,neitherindividualsnornationsareself-sufficient.Nationshaveutilizeddifferenteconomicresources;peoplehavedevelopeddifferentskills.Thisisthefoundationofworldtradeandeconomicactivity.Asaresultofthistradeandactivity,internationalfinanceandba
2、nkinghaveevolved.Forexample,theUnitedStatesisamajorconsumerofcoffee,yetitdoesnothavetheclimatetogrowanyoritsown.Consequently,theUnitedStatesmustimportcoffeefromcountries(suchasBrazil,ColombiaandGuatemala)thatgrowcoffeeefficiently.Ontheotherhand,theUnitedStateshaslargeindustrialplantscapableofprod
3、ucingavarietyofgoods,suchaschemicalsandairplanes,whichcanbesoldtonationsthatneedthem.Ifnationstradeditemforitem,suchasoneautomobilefor10,000bagsofcoffee,foreigntradewouldbeextremelycumbersomeandrestrictive.Soinsteadofbatter,whichistradeofgoodswithoutanexchangeofmoney,theUnitedStatereceivesmoneyin
4、paymentforwhatitsells.ItpaysforBraziliancoffeewithdollars,whichBrazilcanthenusetobuywoolfromAustralia,whichinturncanbuytextilesGreatBritain,whichcanthenbuytobaccofromtheUnitedState.Foreigntrade,theexchangeofgoodsbetweennations,takesplaceformanyreasons.Thefirst,asmentionedaboveisthatnonationhasall
5、ofthecommoditiesthatitneeds.Rawmaterialsarescatteredaroundtheworld.LargedepositsofcopperareminedinPeruandZaire,diamondsareminedinSouthAfricaandpetroleumisrecoveredintheMiddleEast.Countriesthatdonothavetheseresourceswithintheirownboundariesmustbuyfromcountriesthatexportthem.Foreigntradealsooccursb
6、ecauseacountryoftendoesnothaveenoughofaparticularitemtomeetitsneeds.AlthoughtheUnitedStatesisamajorproducerofsugar,itconsumesmorethanitcanproduceinternallyandthusmustimportsugar.Third,onenationcansellsomeitemsatalowercostthanothercountries.Japanhasbeenabletoexportlargequantitiesofradiosandtelevis
7、ionsetsbecauseitcanproducethemmoreefficientlythanothercountries.ItischeaperfortheUnitedStatestobuythesefromJapanthantoproducethemdomestically.Accordingtoeconomictheory,Japanshouldproduceandexportthoseitemsfromwhichitde
