MARCH 16/17, 2015 Announcements:  Macro bodies project due 4/2/15  Vocab quiz: March 26/27  Content quiz: March 30/31 EQ  Explain why individuals,

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MARCH 16/17, 2015 Announcements:  Macro bodies project due 4/2/15  Vocab quiz: March 26/27  Content quiz: March 30/31 EQ  Explain why individuals, businesses, and governments trade goods and services. Standard SSEIN1 Warmups:  Why do you think we trade internationally?  Define import  Define export Agenda:  Notes  Discuss class schedule for rest of year  Assign unit 4 project

a)Explain the difference between balance of trade and balance of payments. SSEIN1 THE STUDENT WILL EXPLAIN WHY INDIVIDUALS, BUSINESSES, AND GOVERNMENTS TRADE GOODS AND SERVICES.

 Trade is the voluntary exchange of goods and services.  When costs are greater than the benefits people stop trading  If I can import it cheaper than I make it I will trade with you. WHAT IS TRADE?

 People and organizations in different countries often trade goods and services because they value the things they buy more than they sell  People only exchange goods and services when it benefits them OR marginal benefits outweigh marginal costs INTERNATIONAL TRADE

 Export: Goods that a nation sells to other countries  Import: goods that a nation buys from other nations EXPORTS AND IMPORTS

Benefits 1. Increase in competition 2. Increases the variety of goods and services 3. Spreads knowledge and education 4. Spreads new technologies and production methods BENEFITS OF TRADE

BALANCE OF TRADE  Every country = accounting record of international transactions  Government keeps the records  People and firms do the trading

BALANCE OF TRADE  Balance of trade  We want to sell more than we buy  Exports = money coming in = credits (+)  Imports = money going out = debits (-)  Net Exports = exports – imports  + = surplus  - = trade deficit

CAPITAL/FINANCIAL ACCOUNTS  Money when we buy and sell capital internationally.  Someone in China buys U.S. bonds = credit = good (we get the $$)  Someone in U.S. buys Chinese bond = debit = bad (they get the $$)  Same thing for buying/selling businesses

BALANCE OF PAYMENTS  Must balance  Deficit in trade = have to have surplus capital/financial account  Surplus in trade have to have deficit in capital/financial accounts

 Balance of Trade v Balance of Payments  Balance of Trade = actual trading of imports/exports  Balance of Payments = record of the actual trading MUST KNOW