Trade and world output/pattern of international trade....?

Question

Explain the relation between trade and world output.

Describe the broad pattern of international trade.

If the nations of the world were to suddenly cut off all trade with one another, what products might you no longer be able to obtain in your country? Choose one other country and identify the products it would need to do without.

Answer 1

This is too broad to give more than simple answers. Trade increases world output by creating efficiencies of scale. If Brazil and the US both produce steel and coffee, both countries might produce 100 units. If each specializes in coffee and steel respectively, the out put might be 150 units each. The world out put increases 50%.

If nations cut off trade or imposed protectionist tariffs, the countries would have to keep inefficient operations. This might not be a bad idea for defensive purposes, and short time adjustments.

If the US cut off trade, most consumer goods would be off the shelves.