GLOBAL ECONOMICS
Global Interdependence –people and nations all over the
world depend upon one another for many goods and
services
 Developed countries – nations with a high standard of
living and high per captia GDP
(ex. US, Canada, & Japan)
 Developing countries – low average income and has
low human capital (ex. Ethiopia, Somalia, Sri Lanka)
 Globalization – individuals and nations working
internationally across barriers of distance, culture,
and technology
 Foreign aid – money, food, military assistance given
to less developed countries
 Exchange rate – price of one nation’s currency in
terms of another nation’s currency
 Child labor – using children to work long hours in
unsafe factories and mills denying them an education
and endangering them
 Human rights – universal rights such as right to life,
liberty and fair treatment
 United Nations – purpose is to maintain international
peace and seek solutions to
global problems
International Trade – major force in world today –
exchange of services and goods between different
nations
 Foreign trade – international trade among nations
 Import – goods purchased from other countries
 Export – goods sold to other countries
 Tariffs – tax on imported goods
 Favorable balance of trade – exports are greater
than imports
 Unfavorable balance of trade (trade deficit) –
imports are worth more than its exports
 Free trade – unhindered flow of services between
countries – no trade barriers
 Protective tariffs – when nations try to protect
their industries by placing tariffs on imports
 Comparative advantage – the ability to produce a
good at a lower cost than another country can
International Economic Organizations – exist to help set
trade policy and monitor trade
 Treaty – a contract binding two or more states under
international law
 North American Free Trade Agreement (NAFTA) – a
trade treaty among US, Canada, and Mexico
 World Trade Organization (WTO) – deals with rules
and practices of trade among nations International
Monetary Fund (IMF) - monitors global financial
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system through foreign exchange rates and balances
of trade
International Monetary Fund (IMF) - monitors global
financial system through foreign exchange rates and
balances of trade
World Bank – lends money to developing countries and
expects loans to be repaid
European Union – confederation of 25 European
countries who cooperate politically
Multinational conglomerate – large international
company who have offices, factories, or branch
plants in multiple countries