The quotation from Federal Reserve Chairman Ben Bernanke at the beginning of the chapter is from a speech that he delivered in Jackson Hole, Wyoming, on August 25, 2006, titled “Global Economic Integration: What’s New and What’s Not?” The full transcript of the speech is available Chairman Ben S. Bernanke's Speech. Read this speech and answer the following questions:
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Work It Out, Chapter 1, Question 1
(Transcript of audio with descriptions. Transcript includes narrator headings and description headings of the visual content)
(Speaker)
This problem will ask you to identify the similarities between international trade today and trade before World War I, according to former Chairman of the Federal Reserve Ben Bernanke.
Here are some potential similarities.
(Description)
The following text is shown on the slide:
- Physical distance is the same.
- New transportation methods allow for more trade.
- Intra-industry trade has increased.
- Governments foster open trade, as well as financial flows.
- Information and communication technologies permit trade in services.
- Scale and pace of growth in trade is faster.
- Some groups are opposed to free trade.
- Core-periphery pattern is no longer relevant.
- Fragmentation of production processes has occurred.
- The range of goods that are tradable has broadened.
- Capital markets are more mature, and gross flows are larger.
(Speaker)
Now let’s consider the list and identify the ways that international trade today does not differ from the trade that occurred before World War I.
Physical distance is the same is a way that international trade today does not differ from the trade that occurred before World War I.
(Description)
The text 'Physical distance is the same' is briefly highlighted.
(Speaker)
The physical distance between two places, for instance London and New York, is fixed and does not change. Therefore, physical distance is a way that international trade today does not differ from the trade that occurred before World War I.
New transportation methods allow for more trade is also a way that international trade today does not differ from the trade that occurred before World War I.
(Description)
The text 'New transportation methods allow for more trade' is briefly highlighted.
(Speaker)
Advances in transportation technology, such as steam and rail, before World War I are similar to advances in jet and intermodal shipping today. The constant evolution in transportation methods is why “new transportation methods allow for more trade” is a way that international trade today does not differ from the trade that occurred before World War I.
Governments foster open trade, as well as financial flows is another way that international trade today does not differ from the trade that occurred before World War I.
(Description)
The text 'Governments foster open trade, as well as financial flows' is briefly highlighted.
(Speaker)
Then, as now, governments favored polices, such as reducing tariffs, to foster open trade and financial flows.
Some groups are opposed to free trade is another way that international trade today does not differ from the trade that occurred before World War I.
(Description)
The text 'Some groups are opposed to free trade' is briefly highlighted.
(Speaker)
Just as there are groups today that oppose free trade, there were groups before World War I that also opposed trade and favored protectionist policies.
Yet another way that international trade today does not differ from the trade that occurred before World War I is that the range of goods that are tradable has broadened.
(Description)
The text 'The range of goods that are tradable has broadened' is highlighted.
(Speaker)
Trade, both prior to World War I and today, has been characterized by an ever-increasing range of tradable goods.