1. Unit 8 Day 2 Govt Policies w/i Trade

2. Comparative Advantage ability to produce a good or service at a lower opportunity cost than another entity. ability to produce a good or service at a lower opportunity cost than another entity.

3. Comparative Advantage cont. US comparative advantage today lies increasingly in services (financial), agricultural products & processed food, & high-tech manufacturing. US comparative advantage today lies increasingly in services (financial), agricultural products & processed food, & high-tech manufacturing. China’s Comparative Advantage today lies largely in labor-intensive manufactured goods. China’s Comparative Advantage today lies largely in labor-intensive manufactured goods.

4. Absolute Advantage occurs when ONE person, company, or country is more efficient at producing the same good or service than another company. occurs when ONE person, company, or country is more efficient at producing the same good or service than another company. Example: If Steve can cut four lawns in an hour and Mike can cut five lawns in an hour, then Mike has an absolute advantagein lawn cutting. Example: If Steve can cut four lawns in an hour and Mike can cut five lawns in an hour, then Mike has an absolute advantage in lawn cutting.

5. Embargo an official ban on trade or other commercial activity w/ a particular country. an official ban on trade or other commercial activity w/ a particular country. Who does the US have an embargo w/? North Korea Who does the US have an embargo w/? North Korea Estimates place the cost of the “former” Cuban embargo to the US economy b/t $1.2 & $4.84 billion annually. Estimates place the cost of the “former” Cuban embargo to the US economy b/t $1.2 & $4.84 billion annually.

6. Sanctions A coercive measure adopted usually by several nations acting together against a nation violating international law. A coercive measure adopted usually by several nations acting together against a nation violating international law. US sanctions against Iran refer to economic, trade, scientific & military sanctions against Iran, which have been imposed by the US govt., or under US pressure by the international community through the UN Security Council. US sanctions against Iran refer to economic, trade, scientific & military sanctions against Iran, which have been imposed by the US govt., or under US pressure by the international community through the UN Security Council. Currently, the sanctions include an embargo on dealings w/ Iran by the US, and a ban on selling aircraft & repair parts to Iranian aviation companies Currently, the sanctions include an embargo on dealings w/ Iran by the US, and a ban on selling aircraft & repair parts to Iranian aviation companies

7. What nations does the US have sanctions against? Iran - illicit nuclear activities (terminated). Iran - illicit nuclear activities (terminated). Burma aka Union of Myanmar - human rights and political reasons. Burma aka Union of Myanmar - human rights and political reasons. Ivory Coast - human rights violations. Ivory Coast - human rights violations. Cuba – b/c they are not a Democracy – dates back to the 1960s (terminated). Cuba – b/c they are not a Democracy – dates back to the 1960s (terminated). North Korea – economic – No trade b/t countries. North Korea – economic – No trade b/t countries. Syria - sponsors of terrorism. Syria - sponsors of terrorism. Others: the Balkans, Belarus, Congo, Iraq, Liberia, Sudan, Zimbabwe – and RUSSIA Others: the Balkans, Belarus, Congo, Iraq, Liberia, Sudan, Zimbabwe – and RUSSIA

8. Tariffs A tax on imports. A tax on imports. Tariffs give a price advantage to locally- produced goods over similar goods which are imported, & they raise revenues for govts. Tariffs give a price advantage to locally- produced goods over similar goods which are imported, & they raise revenues for govts.

9. Benefits of trade for the US US goods/services exports supported an estimated 9.8 million jobs in 2012. US goods/services exports supported an estimated 9.8 million jobs in 2012. Every billion dollars of goods/services exports supported more than an estimated 4,900 jobs in 2012. Every billion dollars of goods/services exports supported more than an estimated 4,900 jobs in 2012. US manufacturing exports supported an estimated 2.4 million manufacturing jobs in 2009 (20% of all jobs in the manufacturing sector) US manufacturing exports supported an estimated 2.4 million manufacturing jobs in 2009 (20% of all jobs in the manufacturing sector) US agricultural exports supported an estimated 923 thousand jobs on and off the farm in 2011. US agricultural exports supported an estimated 923 thousand jobs on and off the farm in 2011. Every billion dollars of US agricultural exports in 2011 required 6,800 American jobs throughout the economy. Every billion dollars of US agricultural exports in 2011 required 6,800 American jobs throughout the economy. US jobs supported by goods exports pay 13-18% more than the US national average. US jobs supported by goods exports pay 13-18% more than the US national average. Exports at 13.9% of U.S. GDP in 2012 – its highest share ever. Exports at 13.9% of U.S. GDP in 2012 – its highest share ever.

12. US balance of trade There is NO balance of trade for the US. There is NO balance of trade for the US. Reason: the US imports more goods/services than it exports on a yearly basis. Reason: the US imports more goods/services than it exports on a yearly basis. China is now the #1 trading country in the world today. China is now the #1 trading country in the world today. The US is now the #1 importing country. The US is now the #1 importing country.