Learning Objectives
1. Explain why nations need to trade
with each other.
2. Describe how currency exchange
works.
3. Explain why countries and people
specialize in producing goods and
services.
Why It’s Important
Global trade doesn’t just influence business, it
also affects all the countries and people of the
world.
Ch 10, 11, 12 -
Slide 1
The Global Marketplace
The Global Economy is the interconnected
economies of the nations in the world
International trade involves exchanging goods
and services between countries
multinational corporation - company that
does business in many countries and has
facilities and offices around the world.
Ch 10, 11, 12 -
Slide 2
Types of Trade
Imports – G&S bought from another country
Exports – G&S sold to another country
Balance of trade - difference between how
much a country imports and exports
Exports > Imports = trade surplus
Exports < Imports = trade deficit
Ch 10, 11, 12 -
Slide 3
MAJOR EXPORTS AND IMPORTS OF THE UNITED STATES
Source: Standard & Poor’s
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Slide 4
The Global Marketplace
Countries specialize in resources they have
What does the middle east specialize in?
What do we specialize in?
U.S. resources: human, natural, & production
Comparative advantage – ability of a country
or company to produce a particular good more
efficiently than another country or company.
Ch 10, 11, 12 -
Slide 5
Currency
- countries pay for other country’s products with
currency. Currency is another name for money
- types of $$: dollars, pesos, & yen
- foreign exchange market is made up of
banks where different currencies are exchanged
- The exchange rate is the price at which one
currency can buy another currency
Ch 10, 11, 12 -
Slide 6
Currency
Exchange rates change from day to day and
from country to country
favorable exchange rate - value of a country’s
currency goes up compared to another country’s
unfavorable exchange rate - when the value of
a country’s currency goes down compared to
another country’s
Ch 10, 11, 12 -
Slide 7
????????????????????????
• What is it called when
a country exports
more than it imports?
• The price at which one
currency can buy
another currency is
called what?
• Trade surplus
• The exchange rate
Ch 10, 11, 12 -
Slide 8
HOMEWORK
• Rd. Pgs. 169-173
• ?’s 1-3 on Pg. 173
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Slide 9
Learning Objectives
1) State the advantages of
protectionism and free trade.
2) Name types of trade barriers.
3) Identify some of the major trade
alliances in the world today.
Why It’s Important
Global trade doesn’t just influence business, it
also affects all the countries and people of the
world.
Ch 10, 11, 12 -
Slide 10
Global Competition
• Protectionism - the practice of putting limits
on foreign trade to protect businesses at home
•
•
•
•
Trade barriers – put up to limit trade
Tariff - tax on imports to increase their price
Quota – limit on # of imported products
Embargo - gov decides to stop an import/export
Ch 10, 11, 12 -
Slide 11
Why Protectionism???
•Foreign competition can lower the demand for
products made at home
•Companies at home need to be protected from unfair
foreign competition
•The use of cheap labor in other countries can lower
wages or threaten jobs at home
•A country can become too dependent on another
country for important products like oil or grain
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Slide 12
?????????????????????????
• What is it called when there is a limit on the
amount of imported goods?
• QUOTA
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Slide 13
Supporters of free trade believe there should
be no limits on trade
To reduce limits on trade more countries are
forming trade alliances with each other
Major Trade Alliances:
• NAFTA (North
American Free
Trade Agreement)
• European Union
(EU)
• Association of
Southeast Asian
Nations (ASEAN)
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Slide 14
Why Free Trade???
•It opens up new markets in other countries (300
million vs. 6 billion)
•It creates new jobs (global companies)
•Competition forces businesses to be more efficient
and productive
•It promotes cultural understanding and cooperation
between countries
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Slide 15
???????????????????????
• What is the major trade alliance in Europe
called?
• The European Union
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Slide 16
HOMEWORK
• Review Key Concepts Pg. 174
• Questions 2-5
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Slide 17