However, these perceptions fail to distinguish between the general level of employment in the economy and employment in specific industries. During the 1960s, the U.S. was considered by most to be the industrial giant of the world. International trade enables countries to specialize in what they do best and acquire through imports the things they have difficulty in producing. By so doing, resources are more efficiently used on a global, as well as a domestic basis, and these efficiencies are passed on in the form of lower prices and economic growth. Review Questions Understand how both exports and imports contribute to the economy of the United States.
Exports generate jobs, economic activity, and income.
Imports also generate jobs and create economic activity, but also result in cost savings to consumers which translate into a higher standard of living. Explain why trade occurs. Trade occurs because both producers and consumers, as well as the nation, benefit from exchanging goods they can produce most efficiently for goods they cannot produce or that are more costly to produce. Give an example of how protection may actually increase the cost of goods to consumers and taxpayer costs. Explain why the United States is not losing its industrial base.