Notes: E2 - Explain how specialization encourages trade between countries; compare and contrast different types of trade barriers (tariffs, quotas, and embargos); and explain why international trade requires a system for exchanging currencies between nations. Vocabulary: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Specialization – concentrating all of your energy and resources on a particular good or service Encourage – to make MORE likely to happen Trade – to exchange one thing for another (sometimes money is one of these things) Barrier – something that stands in way of or prevents an action Imports – goods traded INTO a country Exports – goods traded OUT OF a country Tax – an extra fee that the government adds to products Tariff – a tax on imported or exported goods Quota – a limit on the number of products that can be imported or exported Embargo – a total block of trade to a country International – between two or more countries Requires – must have Currency – money (coin or paper) Specialization encourages trade between countries because, when a country specializes in a product, the quality of the product goes up and the price goes down. This encourages other countries to buy this product from them. A trade barrier is anything that stands in the way of trade. There are three types of trade barriers: tariffs, quotas, and embargos. A tariff is a tax on imported or exported goods. This can stand in the way of trade because it raises the price of the good. A quota is a limit on the amount of a certain good that can be imported or exported. This can stand in the way of trade because it limits the amount of product. An embargo is a government order to completely stop trading with another country. It is usually given because the embargoed nation is doing something that the rest of the world does not approve of. An embargo limits trade because it totally shuts of trade to a certain country. International trade is trade between different countries. It requires a way (system) for people to exchange their currency for other countries’ currency. This is because businesses expect to be paid with the currency of their own country. *On the back of this sheet, draw three circle maps with the following titles: Specialization, Trade Barriers, and Currency Exchange. Fill the outer circles with as many words and pictures as possible.