TRADE Why is it important?

What is Trade? Trade is defined as ________________________________________

International Trade International Trade is based on ___________________________of goods and services. The total value of international trade is now more than ____________________________!!! International Trade has benefits for both _____________________throughout Asia and Africa. Car factories in Japan, for example, are able to earn money by selling their goods in other countries. Buyers all over the world benefit as well, by gaining ___________________of cars to choose from.

What are Imports and Exports? Imports are _____________________________ Exports are ______________________________

Specialization Specialization is a situation where each country ________________________________________ Many nations ___________ in producing certain goods and services. Specialization leads to increased ____________ because countries are able to earn money ____________________________ At the same time, countries want to __________they are not able to produce at home.

Natural Resources and Specialization Many countries specialize in a certain product ________________________________________________ Example: Saudi Arabia It has the largest ______________in the world and specializes in producing oil which it sells in large amounts to other nations. Saudi Arabia can then use the money it earns to ________________that are produced in other countries.

Trade barriers A Trade Barrier is defined as ___________________________________________ Some trade barriers are part of the ______________________. Africa’s Sahara Desert and Asia’s Himalayan Mountains are examples of physical trade barriers since moving goods across deserts and over mountains can be _______________ if not almost impossible!!! Governments use _________________specifically to protect their ________________ from foreign competition.

Three Kinds of Trade Barriers Govenrments use These are: __________ ______________ _____________

TARIFFS A Tariff is _____________________. By taxing _______________, a country can protect ____________made in its own country. A tariff(tax) will make the imported good cost _________! The effect will hopefully will be that people will buy the _________ native country version. Example: A GMC SUV versus a Honda Passport!

Import Quota An Import Quota____________the number of _________ that can be____________into a country. It has a similar effect to ___________ because it makes a certain item _______ to get. When things are rare, their price ___________ thus making most people buy the cheaper native country version!

Embargo An embargo is a _____________with another country. Embargoes are used for _____________ versus economic reasons. Example: After Iraq invaded Kuwait in 1990, the U.N. imposed a _____________on Iraq. The goal was to ____________ Iraqi Leader Saddam Hussein to withdraw his forces from Kuwait.

Trade Agreements The goal of _________________is to increase trade with certain countries. These agreements remove ___________and _______________in countries by opening new markets and creating jobs.

Free Trade Free trade is defined as trade without __________________________ Countries sign free trade agreements in the hope that open trade will benefit all the _______________ involved in the trade agreement. Example: Ten countries in Southern and Eastern Asia have joined the Association of Southeast Asian Nations(ASEAN) Free Trade Area. ASEAN countries work ______________ to increase trade between members by ____________and other _________________.

Exchange Rates There are many different ____________ used in the world today. A currency is defined as a _____________. Example: The U.S. Dollar A ____________________ must be used in order for countries with ______________to trade. The currency exchange rate tells people in one country ____________ their money is worth in another country.

Exchage Rate Tidbits The ______________________usually changes from day to day. Each country has a different _____________with every other country. The only way to find out an up to date exchange rate is to check with a bank, an exchange rate service, or the internet: Here is an Exchange Rate Calculator

The VaLue of an Exchange Rate Bottom Line: The Currency exchange system ___________ foreign trade to happen. Without currency exchange rates, countries would not know how much ________________for the goods they export. They would not know what to _______________they import! Additional examples of different currencies are the Indian _________, the Israeli _______, and the South African _______.