Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE1 International Business Basics Goals Describe importing and exporting activities. Compare balance of trade and balance of payments. List factors that affect the value of global currencies. 3-1

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 2 Key Terms balance of payments balance of trade exchange rate exports imports

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 3 TRADING AMONG NATIONS Absolute advantage Comparative advantage Importing Exporting

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 4 Source: United States Geological Survey Minerals Information U.S. Import Reliance for Selected Raw Materials

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 5 Checkpoint >> How does importing differ from exporting? Answer Importing is bringing items from other countries into a country. Exporting is selling goods and services to other countries.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 6 MEASURING TRADE RELATIONS Balance of trade Balance of payments

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 7 U.S. Trade Balances

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 8 Balance of Trade

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 9 Checkpoint >> How does balance of trade differ from balance of payments? Answer Balance of trade is the difference between a country’s total exports and total imports. Balance of payments is the difference between the amount of money that comes into a country and the amount that goes out of it.

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 10 INTERNATIONAL CURRENCY Foreign exchange rates Factors affecting currency values Three main factors affect currency Balance of payments Economic conditions Political disability

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 11 Recent Values of Currencies * U.S. dollars

Intro to Business, 7e © 2009 South-Western, Cengage Learning SLIDE Chapter 3 12 Checkpoint >> What factors affect the value of a country’s currency? Answer balance of payments economic conditions political stability