Question

Once the U.S. government opened its domestic markets to international trade, the competition from imported cars, steel, and other products caused demand for similar U.S. goods to ________?

1) increase
2) decrease
3) remain the same
4) fluctuate

Answer 1

The increased competition from imported cars and steel caused demand for similar U.S. goods to decrease. Factors like relative prices and foreign subsidies also impact demand and the number of manufacturing jobs.

Step-by-step explanation:

When the U.S. government opened its domestic markets to international trade, U.S. carmakers and steelmakers faced significant challenges due to increased competition from foreign manufacturers. This competition particularly intensified in the 1960s with the influx of Japanese and European vehicles and steel. As the sales of imported cars and steel rose, the demand for similar U.S.-made products tended to decrease. Consumers, attracted by a variety of factors including price, quality, and brand diversity, often favored the imported products. This shift in consumer behavior consequently led to a reduction in the number of jobs in U.S. auto manufacturing. Moreover, relative prices play a critical role in international trade; goods that become relatively more expensive, perhaps due to exchange rate changes or increased production costs within the U.S., would also lead to a decline in U.S. exports. Additionally, policies of trading partners can affect a country's import levels, such as when foreign governments subsidize their industries, making their exports cheaper and more attractive in the global market.