ECONOMIC UNDERSTANDINGS
Specialization, Trade, Trade Barriers, & Exchange
Rates
Standard SS7E9
Standard SS7E9: The student will explain
how voluntary trade benefits buyers and
sellers in Southern and Eastern Asia.
a. Explain how specialization
encourages trade between countries.
b. Compare and contrast different
types of trade barriers, such as tariffs,
quotas, and embargoes.
c. Explain why international trade
requires a system for exchanging
currencies between nations.
Agenda Message:
Standard: Explain how specialization encourages trade between
countries. Compare and contrast different types of trade
barriers, such as tariffs, quotas, and embargoes.
Essential Question: Monday, March 17th; Why do countries trade
goods? What is Specialization?
Warm-up: Because of Japan’s lack of Natural Resources, what is
the source of nearly all of Japan‘s GDP growth?
Today We Will:
1.
Start Economic Specialization, Trade, & Trade Barriers
E.Q. Answer:
Countries trade goods because no country has all the
resources necessary to efficiently produce everything
its people need.
Countries specialize in what they do best.
Specialization is an efficient way to work, and the cost
of items produced is much lower as a result of
specialization.
Warm-up Answer:
Manufacturing, Japan imports the raw materials it
needs to feed a very strong manufacturing industry.
Agenda Message:
Standard: Explain how specialization encourages trade between
countries. Compare and contrast different types of trade
barriers, such as tariffs, quotas, and embargoes.
Essential Question for Tuesday March 18th: List and briefly
describe the three types of Trade Barriers.
Warm-up:
Which countries in S&EA have strong entrepreneurship driving the
success of their economies?
Today We Will:
1.
Complete Economic Trade
2.
Start Trade Barriers
The three types of trade barriers include:
tariffs, quotas, and trade embargoes
Agenda Message:
Standard: Explain why international trade requires a
system for exchanging currencies between nations.
Essential Question for Wednesday March 6th: Why do
countries need a system to convert different
currencies (money) for international trade?
Warm-up: What do tariffs and quota trade barriers ultimately
do to the cost of imported products?
Today We Will:
1. Exchange Rates
2. CDA-4 Study Guide
Agenda Message:
Standard: Explain why international trade requires a
system for exchanging currencies between nations.
Essential Question for Thursday March 6th: List the
currencies (Money) for China, India, Japan, Vietnam,
& South Korea.
Warm-Up:
Today We Will:
1. International Currency Exchange
Agenda Message:
Standard: Explain how specialization encourages trade between
countries. Compare and contrast different types of trade
barriers, such as tariffs, quotas, and embargoes.
Essential Question: Monday, March 17th; Why do countries trade
goods? What is Specialization?
Warm-up: Because of Japan’s lack of Natural Resources, what is
the source of nearly all of Japan‘s GDP growth?
Today We Will:
1.
Start Economic Specialization, Trade, & Trade Barriers
E.Q. Answer:
Countries trade goods because no country has all the
resources necessary to efficiently produce everything
its people need.
Countries specialize in what they do best.
Specialization is an efficient way to work, and the cost
of items produced is much lower as a result of
specialization.
Warm-up Answer:
Manufacturing, Japan imports the raw materials it
needs to feed a very strong manufacturing industry.
Specialization Helps Everyone
Countries trade goods because no country has all
the resources necessary to efficiently produce
everything its people need.
Every country has different natural resources,
human capital, capital, and entrepreneurial
resources.
Countries specialize in what they do best.
Specialization is an efficient way to work, and
the cost of items produced is much lower as a
result of specialization.
Specialization encourages trade between countries
because country “A” can get what it needs at
the lowest possible cost when it is produced by
country “B” that specializes in making that item.
One example of specialization is trade between
Australia and Japan. Japan has few natural
resources, however, it has developed industries
like automobile manufacturing.
Japan buys many of the raw materials from
Australia, a country rich in natural resources.
Japan “specializes in” auto manufacturing.
Australia “specializes in” exporting raw
materials. In the end, Australia imports lots of
cars from Japan!
Specialization - Specialization occurs
when one nation can produce a good or
service at a lower opportunity cost than
another nation. Specialization encourages
trade and can be a positive factor in a
country’s economy. For example, if a
country specializes in oil, they can trade
oil for a certain food that another country
specializes in so that both countries
benefit.
Barriers to Trade
Countries sometime set up trade barriers to
restrict trade. Why? The reason is that they
want to produce their own goods and sell them
in their own country.
These trade barriers include tariffs, quotas, and
trade embargoes.
Tariff
A tariff is a “tax” placed on imported goods.
Tariffs cause the consumer to pay a higher
price for an imported item, increasing the
demand for a lower-priced item produced
domestically.
Quota
A quota is a “restriction, or limit, on the
amount of goods or products that can be
imported into a country”.
Quotas will often cause shortages that
ultimately force prices to rise.
Standard SS7E9: The student will explain
how voluntary trade benefits buyers and
sellers in Southern and Eastern Asia.
a. Explain how specialization
encourages trade between countries.
b. Compare and contrast different
types of trade barriers, such as tariffs,
quotas, and embargoes.
c. Explain why international trade
requires a system for exchanging
currencies between nations.
Agenda Message:
Standard: Explain how specialization encourages trade between
countries. Compare and contrast different types of trade
barriers, such as tariffs, quotas, and embargoes.
Essential Question for Tuesday March 18th: List and briefly
describe the three types of Trade Barriers.
Warm-up:
Which countries in S&EA have strong entrepreneurship driving the
success of their economies?
Today We Will:
1.
Complete Economic Trade
2.
Start Trade Barriers
3.
Complete a graphic organizer (groups)
The three types of trade barriers include:
tariffs, quotas, and trade embargoes
Trade Embargoes
Trade embargoes “forbid or stops trade
completely” with another country.
Examples of Trade Barriers
 In
the 1980’s, quotas were set restricting
how many Japanese cars could be imported
into the U.S. to protect the U.S. car
manufacturing industry.
 India
imposes tariffs on agricultural products
in order to protect its own farming industry.
Examples of Trade Barriers cont.
 Beginning
in 2001, the U.S. imposed tariffs
on steel imported from China, India, and
several other nations to protect the U.S.
steel industry.
 In
2005, the U.S. imposed temporary quotas
on certain types of cotton clothing from
China in order to protect U.S. clothing
manufacturers.
Examples of Trade Barriers cont.
 After
the Vietnam War, the United States
imposed a trade embargo against Vietnam to
pressure the Vietnamese government to
provide information on Americans missing in
action (MIA’s) during the war.
Other People’s Money/Foreign Exchange
Because every country does not use the same type
of money, international trade requires a system
for exchange of currencies between nations.
That system is called foreign exchange. The
exchange rate is how much one currency is
worth in comparison of the other.
Examples of currencies in Asia include the
Japanese yen, the Indian rupee, the Vietnamese
dong, the South Korean won, and the Chinese
yuan.