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1、WorldTradeandInternationalTradeIntoday’scomplexeconomicworld,neitherindividualsnornationsareself-sufficient.Nationshaveutilizeddifferenteconomicresources;peoplehavedevelopeddifferentskills.Thisisthefoundationofworldtradeandeconomicactivity.Asaresultofthistradeandactivity,internati
2、onalfinanceandbankinghaveevolved.Forexample,theUnitedStatesisamajorconsumerofcoffee,yetitdoesnothavetheclimatetogrowanyoritsown.Consequently,theUnitedStatesmustimportcoffeefromcountries(suchasBrazil,ColombiaandGuatemala)thatgrowcoffeeefficiently.Ontheotherhand,theUnitedStateshasla
3、rgeindustrialplantscapableofproducingavarietyofgoods,suchaschemicalsandairplanes,whichcanbesoldtonationsthatneedthem.Ifnationstradeditemforitem,suchasoneautomobilefor10,000bagsofcoffee,foreigntradewouldbeextremelycumbersomeandrestrictive.Soinsteadofbatter,whichistradeofgoodswithou
4、tanexchangeofmoney,theUnitedStatereceivesmoneyinpaymentforwhatitsells.ItpaysforBraziliancoffeewithdollars,whichBrazilcanthenusetobuywoolfromAustralia,whichinturncanbuytextilesGreatBritain,whichcanthenbuytobaccofromtheUnitedState.Foreigntrade,theexchangeofgoodsbetweennations,takesp
5、laceformanyreasons.Thefirst,asmentionedaboveisthatnonationhasallofthecommoditiesthatitneeds.Rawmaterialsarescatteredaroundtheworld.LargedepositsofcopperareminedinPeruandZaire,diamondsareminedinSouthAfricaandpetroleumisrecoveredintheMiddleEast.Countriesthatdonothavetheseresourceswi
6、thintheirownboundariesmustbuyfromcountriesthatexportthem.Foreigntradealsooccursbecauseacountryoftendoesnothaveenoughofaparticularitemtomeetitsneeds.AlthoughtheUnitedStatesisamajorproducerofsugar,itconsumesmorethanitcanproduceinternallyandthusmustimportsugar.Third,onenationcansells
7、omeitemsatalowercostthanothercountries.Japanhasbeenabletoexportlargequantitiesofradiosandtelevisionsetsbecauseitcanproducethemmoreefficientlythanothercountries.ItischeaperfortheUnitedStatestobuythesefromJapanthantoproducethemdomestically.Accordingtoeconomictheory,Japanshouldproduc
8、eandexportthoseitemsfromwhichitde
