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Chapter 10 Business in a Global Economy Section 10.1 The Global Marketplace

Goals of this section Explain why the world has become a global economy. Explain why people and countries specialize in producing goods and services.

The Main Idea International trade has increased because more countries specialize and offer their goods and services to other countries. Also, the value of one nation’s currency in relation to other currencies affects what it buys and sells to other nations.

Key Concepts The Global Economy International Trade

Key Term global economy international trade the interconnected economies of the nations of the world the exchange of goods and services between nations

Key Term multinational corporation trade a company that does business in many countries and has facilities and offices around the world a specific area of business or industry, a skilled occupation, or the people who work in a specific area of business or industry

Key Term imports exports goods and services that one country buys from another country goods and services that one country sells to another country

Key Term balance of trade comparative advantage the difference in value between a country’s imports and exports over a period of time the ability of a country or company to produce a particular good more efficiently than another country or company

Key Term exchange rate the price at which one currency can buy another currency

The Global Economy We live in a global economy fueled by international trade. The development of the global economy is called globalization. global economy the interconnected economies of the nations of the world international trade the exchange of goods and services between nations

The Global Economy Sony is an example of a multinational corporation. multinational corporation a company that does business in many countries and has facilities and offices around the world

International Trade Trade allows countries to meet their individual wants and needs as well as to help their own economies. trade a specific area of business or industry, a skilled occupation, or the people who work in a specific area of business or industry

Multinationals The top multinational companies include Sony, Coca-Cola, Toyota, and Nike.

Figure 10.1 Major Imports and Exports of the United States

Types of Trade Domestic trade is the production, purchase, and sale of goods and services within a country. World trade is the exchange of goods and services across international boundaries.

Imports and Exports One country’s imports are another countries exports. imports goods and services that one country buys from another country exports goods and services that one country sells to another country

Balance of Trade The United States has a favorable balance of trade with Australia. balance of trade the difference in value between a country’s imports and exports over a period of time

Graphic Organizer Trade Surplus A country exports more that it imports Trade Deficit A country imports more that it exports

Specialization To specialize means to focus on a particular activity, area, or product. Specialization builds and sustains a market economy.

Using Resources to Specialize Countries can specialize and trade some of the items that they produce in order to obtain other countries’ goods and services.

Using Resources to Specialize Countries that specialize may have a comparative advantage. comparative advantage the ability of a country or company to produce a particular good more effectively than another country or company

Currency To trade with another country, businesses must convert their money into that nation’s currency. Currency is exchanged on the foreign exchange market.

World Currencies Several countries have the same currencies or use the same currencies.

Currency The exchange rate for currencies changes from day to day and from country to country. exchange rate the price at which one currency can buy another currency

Currency Companies follow the exchange rates to find the best prices for products. A country with an appreciated exchange rate can buy more of another country’s products.

1.What is the global economy? The global economy is the interconnected economies of the nations of the world.

2.What is the difference between domestic trade and international trade? Domestic trade is between parties within a country. International trade is between parties in different countries.

3.Why would a country want its currency to appreciate? A country might want its currency to appreciate so that citizens can buy more goods and services in other countries.

Chapter 10 Business in a Global Economy Section 10.1 The Global Marketplace End of