Directions: The following paragraphs are given in a
wrong order for Questions 41-45, you are required to reorganize these paragraphs
into a coherent article by choosing from the list A-E to fill in each numbered
box. The first and the last paragraphs have been placed for you in Boxes. Mark
your answers on ANSWER SHEET 1.
[A] For example, the United States is a major consumer of
coffee, yet it does not have the climate to grow any of its own. Consequently,
the United States must import coffee from countries (such as Brazil, Colombia
and Guatemala) that grow coffee efficiently. On the other hand, the United
States has large industrial plants capable of producing a variety of goods, such
as chemicals and airplanes, which can be sold to nations that need them. If
nations traded item for item, such as one automobile for 10,000 bags of coffee,
foreign trade would be extremely cumbersome and restrictive. So instead of
barter, which is the trade of goods without an exchange of money, the United
States receives money in payment for what it sells. It pays for Brazilian coffee
with dollars, which Brazil can then use to buy wool from Australia, which in
turn can buy textiles from Great Britain, which can then buy tobacco from the
United States. [B] Foreign trade also occurs because a country
often does not have enough of a particular item to meet its needs. Although the
United States is a major producer of sugar, it consumes more than it can produce
internally and thus must import sugar. [C] Foreign trade, the
exchange of goods between nations, takes place for many reasons. The
first, as mentioned above is that no nation has all of the commodities that it
needs. Raw materials are scattered around the world. Large deposits of copper
are mined in Peru and Zaire, diamonds are mined in South Africa and petroleum is
recovered in the Middle East. Countries that do not have these resources within
their own boundaries must buy from countries that export them.
[D] In today’s complex economic world, neither individuals nor nations are
self-suffi-cient. Nations have utilized different economic resources; people
have developed different skills. This is the foundation of world trade and
economic activity. As a result of this trade and activity, international finance
and banking have evolved. [E] Finally, foreign trade takes place
because of innovation or style. Even though the United States produces more
automobiles than any other country, it still imports large numbers of autos from
Germany, Japan and Sweden, primarily because there is a market for them in the
United States. [F] For most nations, exports and imports are the
most important international activity. When nations export more than they
import, they are said to have a favorable balance of trade. When they import
more than they export, an unfavorable balance of trade exists. Nations try to
maintain a favorable balance of trade, which assures them of the means to buy
necessary imports. [G] Third, one nation can sell some items at
a lower cost than other countries. Japan has been able to export large
quantities of radios and television sets because it can produce them more
efficiently than other countries. It is cheaper for the United States to buy
these from Japan than to produce them domestically. According to economic
theory, Japan should produce and export those items from which it derives a
comparative advantage. It should also buy and import what it needs from those
countries that have a comparative advantage in the desired items.
Order: