Globalization Globalization is the tendency of businesses, technologies, or philosophies to spread throughout the world, or the process of making this happen. The global economy is sometimes referred to as a globality, characterized as a totally interconnected marketplace, unhampered by time zones or national boundaries

Absolute Advantage Absolute Advantage is when a country can produce more of a good than another country using the same quantity of resources Investopedia video clip EOC study guide Globalization #2

Absolute Advantage Example: U.S. can produce 1,000 tons of wheat in a week Japan can produce 100 tons of wheat in a week In this case, who has the absolute advantage in wheat production? US!

Comparative Advantage Comparative Advantage is specializing in the production of a good it can produce at a lower opportunity cost. Investopedia video clip EOC study guide Globalization #1

Benefits of Trade Comparative Advantage video

quiz What is the definition of opportunity cost? The money you spend to buy something. The next best alternative that you give up. The chance that you will lose your money. All of the choices you could have made but didn't.

quiz What is the term to describe when a nation or individual can produce a good or service at a lower opportunity cost than another nation or individual? Specialization Trade Opportunity Comparative Advantage

quiz What does comparative advantage measure? How much it costs to produce a good or service. How many resources a nation has. How much each nation gives up in one good to produce another good. None of these options

Comparative Advantage When country A produces 1 unit of wheat, they give up producing ½ a TV. In other words, Country A’s opportunity cost is ½ a TV. When Country A produces 1 TV, the opportunity cost is 2 units of wheat. What are Country B’s opportunity costs? Production Possibilities Country A Country B Wheat 200 50 TVs 100

Robinson Crusoe Who has absolute advantage in fish? Friday Who has absolute advantage in coconuts? What is Crusoe’s opportunity cost of catching a fish? 10 coconuts What is Friday’s opportunity cost of catching a fish? 15 coconuts What is Crusoe’s opportunity cost of picking a coconut? 1/10 of a fish What is Friday’s opportunity cost of picking a coconut? 1/15 of a fish Friday

The world ends up with more Everyone Wins With Trade! The world ends up with more

Complete Worksheet Ch 15 sec 1 ATK TIME! Complete Worksheet Ch 15 sec 1 Trade creates wealth

International Cooperation and Agreements International trade agreements can lead to international prosperity and peaceful relationships North American Free Trade Agreement, NAFTA eliminated trade barriers between US, Canada, and Mexico Signed by President Bill Clinton in 1994 the overall value of intra-North American trade has more than tripled since the agreement's inception EOC study guide Globalization #5

International Cooperation and Agreements Cont. European Union, EU over 28 member nations creates free-trade zones that reduce or eliminate trade barriers created a single currency EOC study guide Globalization #6

International Cooperation and Agreements Cont. World Trade Organization, WTO negotiates new trade agreements resolves trade disputes From 1930-1995 the average tariff in the US dropped from 59% to 5% EOC study guide Globalization #8

Causes of economic growth? Little to no government debt Low taxes and tariffs invite immigrants Increase in productivity EOC study guide Globalization #10

organizations working to raise the standard of living in majority countries World Bank Aims to reduce poverty in middle-income and poorer countries Provide low-interest loans and grants for Education Health Infrastructure Agriculture Primarily a development institution EOC study guide Globalization #9

organizations working to raise the standard of living in majority countries International Monetary Fund (IMF) Seeks to maintain an orderly system of payments and receipts between nations. Ensure the stability of international monetary system (exchange rates) Facilitate international trade EOC study guide Globalization #7

The Costs and Benefits of Globalization Get with a partner and read through pages 46-50 in the textbook. Create a two columned list describing the benefits and costs of globalization You MUST EXPLAIN----GIVE EXAMPLES