Answer:
1. From international trade, do the gains to the gainers exceed the losses to the losers?
Yes, in general terms, international trade is benefitial to the world economy. This is because of the concept of comparative advantage: countries specialize in the activities that represent the lowest opportunity cost. In other words, countries do what they do best, export their products, and import those they can't produce well.
2. Does international trade cause unemployment to rise in the U.S.?
Depends on the sector. For example, manufacturing jobs in the Midwest have suffered massive losses because companies have moved those jobs to lower-wages countries such as Mexico, China or Vietnam.
On the other hand, highly complex sectors such as computer engineering have benefited from international trade because U.S. companies dominate the market (Intel, Google, AMD, Apple, etc), sell their products all over the world, and locate the highest paying jobs in the U.S.
Briefly list five arguments often given to support trade restrictions.
- National Sovereignty: some people are in favor of autarky, or national self-sufficiency, because of national defense, cultural values, or both. Over 90% of economists support free trade, and therefore, are against autarky.
- Protection of infant industries: some argue that infant industries should be protected until they grow and can compete. Most economists disagree, but some, for example, developmentalists, agree with this point.
- Cultural values: free trade can effectively erase whole sectors of the economy and change cultures. For example, Detroit deindustrialized, and became a vastly different city, it even depopulated. Economists do not usually study culture, but many of them recognize that economic efficiency can come at a great cost.
- Dumping: some countries have used dumping, which is the exporting of goods at very cheap prices even if that represents an accounting loss, with the aim of driving other competitors out of business. Once competition is cleared, prices can be raised. Economists disagree with dumping. The World Trade Organization has signed anti-dumping agreements for example.
- Food Sovereignty: the idea that consumers of food should be in control of its production and distribution. This usually implies that food should be produced locally, and fit cultural values. This idea, again, goes against the concept of comparative advantage that most economists agree with, and has little support in mainstream economic thinking.
3. Is it better for the U.S. dollar to appreciate and be strong, or depreciate and be weak?
Depends on the economic model. If the U.S. wants to become an export-oriented economy, a weak dollar could be good because it would make U.S. goods cheaper. However, a strong dollar can represent a strong economy, and project power.
4. If the U.S. dollar depreciates, what will likely happen to the U.S. trade deficit?
The trade deficit, in theory, should be reduced, because U.S. goods will become cheaper, and the country will export more. However, if U.S. goods were not competitive or wanted abroad, even a very weak dollar would not help reduce the deficit.