International Trade is trade among the nations of the world. The world is getting smaller due to technology and trade between nations is the catalyst to lifting humanity out of poverty. I: Globalization: A: Technological advances: B: Comparative Advantage: ability for one country to produce a good at a relatively lower cost than another country can.

Look carefully at Figure 18.1 why do you think the World Wide Web spread more quickly than the three earlier inventions? Answer below II: Governments and Trade A: Policy: plan of action on an issue- economically it is a plan on international trade Exports: Imports: III: Barriers to Trade A: Protectionist: B: Tariffs C: Quotas:

III: Free trade: Lifting of trade barriers A: In 1944, United States and other nations agree to rebuild global economy on free trade. B: IMF (International Monetary Fund) and the World Bank were created DEFINE EACH C: IMF: D: World Bank: E: GATT ( General Agreement on Tariffs and Trade) 17 countries: F: In 1995, countries under GATT updated and became members of the WTO (World Trade Organization) What does the WTO do?

IV: Regional Agreements A: European Union: B: NAFTA (North American Free Trade Agreement)

C: CAFTA-DR ( Central American –Dominican Republic Free Trade Agreement) Click on the link below, read the article be able to answer questions in class tomorrow. agreements/free-trade- agreements/north-american-free- trade-agreement-nafta

V: Financing Trade A: A nation’s balance of trade can either be a surplus or deficit. 1. Trade Surplus 2. Trade Deficit B: The US uses the dollar as a medium of exchange C: Foreign Exchange rate: what the price of one nation’s currency is in term’s of another country’s currency. D: Most nations’ use a flexible exchange rate or one that allows for the supply and demand of goods to set the price of various currencies. This means a currency’s price may change every day.

Explain the effects a trade deficit and trade surplus has on an economy. How does the exchange rate effect a country’s balance of trade? Answer below.

Putting it all together: Class Activity Barriers to TradePromoting Freer Trade

Draw two diagrams. The first should show how supply and demand affect a nation’s currency exchange rate. The second should show how the nation’s currency exchange rate affects balance of trade. Compare your diagrams with those of your partner. Currency Exchange Rate (Price of Money) CURRENCY EXCHANGE RATE (Price of Money D S QUANITITY BALANCE OF TRADE Currency Exchange Rate (Foreign Currency per US Dollars) CURRENCY EXCHANGE RATE (foreign currency per US dollars)