SS7E6 and SS7E7
SS7E6 a
Trade and Specialization
What is Voluntary Trade?
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Voluntary trade is a key to a ____________ market economy.
VT goes on when both __________ are able to gain something for the exchange.
Ideally, this happens ____________ government ____________ or regulations.
Specialization
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Specialization is where a country makes the ___________ they can produce
___________ and most efficiently to sell on the ___________ market
Not every country can produce all of the ___________ and ___________ it needs.
Therefore, countries ___________ in producing those goods and services they can
produce most ___________.
In ___________ trade, no country can be completely ______________________.
Exchange Rate
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Does every country use the same ___________? No!
Therefore, an ______________________ is necessary in order for international trade to
exist
o For example:
 One Dollar = .91 Euro
 One Dollar = 12.63 South African Rand
SS7E6 and SS7E7
SS7E6 b
TRADE BARRIERS
TARIFF
QUOTA
EMBARGO
SS7E6 and SS7E7
SS7E6 d
Currency Exchange
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Currency exchange – the act of ___________ money from one currency to another
o Example: dollar to a euro
Exchange rates provide a procedure for determining the ___________ of one
country’s currency in terms of another country’s currency. Without a system for
exchanging currencies, it would be very difficult to conduct ___________ trade.
SS7E7 a and b
Gross Domestic Product: Measuring a Country’s Income
STANDARD OF LIVING

Gross = total
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Domestic = produced ___________ the borders

Product = ___________ goods and services

GDP is a measure of ___________ (how much we produce x how much it
___________)
What is counted in GDP?
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FINAL goods and services

Goods/Services ___________ here, even if by a foreign co.
What is NOT counted?

Things produced ___________ the country.
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___________ stuff

___________ Goods

o
window glass in new automobiles
o
lumber in a new house
o
cloth for making dresses
Purely ___________ transactions
What are human capital and capital goods and how do they relate to GDP?

Human capital- the ___________ and skills that make it possible for workers to earn
a living ___________ goods and services.
SS7E6 and SS7E7
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Capital goods- the ___________, machines, and ___________ that people use to
make ___________ to sell.
When a country ___________ in human capital and capital goods, the GDP will
likely ___________.
SS7E7 d
What’s an entrepreneur?

People willing to take ___________ to create new businesses and products

What do you think? Do you think entrepreneurs help the economy? Would you
find entrepreneurs in a command economy or a traditional economy? What
about market or mixed? Why? (Write it below).