(CP) Economics and Personal Finance - Trade Matching Study Guide

Trade Deficit

The U.S. has run this every year since 1976, with the gap growing from $96 billion in 1995 to $945 billion in 2022, driven by consumer demand for imported goods

Protectionism

This policy spiked in the U.S. post-2016, with examples like 25% tariffs on steel imports to protect domestic industries.

Comparative Advantage

The ability of the U.S. to produce software or aircraft more efficiently relative to other goods, leading to trade specialization.

Balance of Payments (BOP)

A record of all economic transactions between the U.S. and the world, showing a current account deficit financed by foreign investment in Treasury bonds.

Economic Growth

The U.S. economy grew from $9.9 trillion in 1995 to over $21 trillion by 2023, despite setbacks like the 2008 financial crisis.

Imports

Goods like electronics and clothing the U.S. buys from abroad, totaling $3.24 trillion in 2022.

Inflation

This peaked at 9.1% in June 2022, prompting Federal Reserve rate hikes to cool the economy.

Trade Surplus

A country exports more than it imports, like Germany with its manufacturing strength, unlike the U.S. experience.

Deindustrialization

The shift from manufacturing (16% of GDP in 1995 to 11% in 2023) to services and tech due to outsourcing and automation.

Free Trade

Policies like NAFTA and WTO participation lowered trade barriers, boosting globalization but costing manufacturing jobs.

Exports

Aircraft, software, and soybeans sold abroad by the U.S., valued at $2.06 trillion in 2022

Balance of Trade

The difference between exports and imports, a key part of the current account in the U.S., consistently negative over 30 years.

Monetary Policy

Low interest rates and quantitative easing post-2008 fueled recovery but also stock and housing bubbles

Income Inequality

The Gini coefficient rose from 0.45 in 1995 to 0.49 in 2022, showing a widening wealth gap.

Tarrifs

Taxes on imports, like the 10-25% imposed on $300 billion of Chinese goods in 2019, aimed at boosting U.S. production.