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Outsourcing as a Way to International Trade

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3. Is outsourcing just a new way of doing international trade or is outsourcing something to fear as fundamentally damaging to the U.S. economy?

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The debate of outsourcing started when President Bush's chief economic adviser, Gregory Mankiw stated that outsourcing jobs to other countries was "just a new way of doing international trade" and "a plus for the economy in the long run." The shifting of jobs to lower-wage countries is an increasingly popular practice in the U.S. by businesses seeking to cut operating costs and this issue has become too emotional because of its two dramatically different effects: it leads to layoffs and dislocations for many U.S. workers even if most economists say that it will ultimately strengthen the U.S. economy.

"Outsourcing" is also commonly called "offshoring" and both terms are used to describe the practice of American firms which contract workers or companies in other countries for the labor to produce a good or service, and/or by building capital through factories or research facilities for the purpose of lowering costs. It has been ...

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The solution discusses outsourcing as a new way of doing international trade or if it is something to fear as fundamentally damaging to the U.S. company. References included.

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International trade, outsourcing, and more...

Can you help me get started with this assignment?

1. Gains from trade:
a. tend to be greater for large countries than for small ones.
b. tend to be smaller for countries producing goods with economies of scale.
c. exist only when a country has an absolute advantage in at least one product.
d. accrue primarily to traders when entry is limited.

2. Isolationism, a policy of trying to minimize a nation's political and economic interactions with the rest of the world:
a. has always been key part of American politics.
b. was important until the late 19th century and then declined.
c. rose in America in the late 19th century and was an important political element until World War II.
d. rose to importance in the U.S. after World War II.

3. In the early 2000s, the outsourcing of service jobs such as those in call centers has become a political issue. How do economists view outsourcing?
a. It helps both countries in the long run.
b. It hurts both countries because we lose jobs and the employees of the call center are exploited with low wages.
c. It helps the U.S. but hurts the country with the low-cost labor.
d. It helps the country getting the jobs but hurts the U.S.

4. Strategic bargaining
a. always reduces the number of trade restrictions.
b. always increases the number of trade restrictions.
c. may increase the number of trade restrictions if it is successful.
d. may reduce the number of trade restrictions if it is successful.

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