Ch. 10 Global Economy 10.1 The Global Marketplace Objectives: Explain why the world has become an global economy Explain why people and countries specialize in producing goods and services

The Global Economy Global economy: the interconnected economies of the nations of the world. International Trade: Involves the exchange of goods and services between nations The development of the global economy is often called globalization Multinational Corporation: A company that does business in many countries and has facilities and offices around the world.

International Trade Trade: an exchange of goods and/or services for money/goods/services Types of trade: Domestic: the production, purchase, and sale of goods and services within a country. Imports: goods and services that one country buys from another country Exports: goods and services that one country sells to another country

Balance of Trade Balance of Trade: the difference in value between a country’s imports and exports over a period of time Deficit: imports greater than exports Surplus: exports greater than imports Do you think the United States has a trade deficit or trade surplus?

Specialization Specialization: to focus on a particular activity, area, or product. Bakeries make baked goods Auto mechanics work on automobiles Specialization builds and sustains a market economy Comparative advantage: the ability of a country or company to produce a particular good more efficient than another country or company Comparative advantage helps improve the standard of living for each country

Currency Exchange Rates: the price at which one currency can buy another currency. Exchange rates change from day to day The amount a country’s currency is worth depends on how many other countries want to buy its products Companies follow exchange rates to find the best prices for products How do you think this works?

Homework Type out all definitions for Ch. 10 Complete 10.1 Reading Activity and Graphic Organizer