2. International Economics
SSEIN1
SSEIN2
SSEIN3

3. Warmup What is the difference between these two words? Absolute
Compare

4. Comparative Advantage
Underline:
Produce good or services
Lower opportunity cost
Other producer
Slightly OR Vastly different resources
BASIS For ALL SPECIALIZATION AND TRADE

5. Absolute Advantage Underline: Produce more units of a good or service
Other producer
Using SAME Quantity of resources
EXACTLY SAME Resources

6. Balance of Trade
Deals ONLY with imports and exports of goods and services
Answers the question – Did we import or export more with Country “X” than they imported or exported with us?

7. Balance of Payments
Deals ONLY with the $$ amount of the goods and services imported and exported
Answers the Question– How much money did we make from exports as compared to the amount of money paid in imports with Country “X”?

9. Explain the difference between Absolute and Comparative Advantage
Warm up
Explain the difference between Absolute and Comparative Advantage

10. SSEIN2 A Vocabulary
Tariff – Tax on anything imported. Usually used to protect domestic producers by making cheap foreign products higher in price. Chickens from China Example
Quota – Maximum # - puts a limit on it. Like a hunting quota… the maximum number of deer you can kill per year is 12.

11. SSEIN2 A Vocabulary
Embargo – stop at the door (entrance) until certain conditions are met - Club Example ---- Embargo on Iran Example
Standards- Set Guidelines – think of school standards – it a minimum of what you should know/do
Subsidies – Gov’t help for domestic producers –instead of penalizing foreign producers the gov’t gives $ to domestic producers to help offset costs of production

12. Warm up
Name 1 Trade Barrier and give an example of how it is used to protect Domestic Producers.

13. Trade Blocks or Trade Organizations
Purpose of a trading block- Organize countries into a group for better trading opportunities and protection. Stronger buying power with countries NOT in the group and ease of trade with other countries who ARE members of the group

14. Example of Trading Blocks
EU – European Union (certain countries in Europe)

15. Example of Trading Blocks
NAFTA – North America Free Trade Agreement

16. Example of Trading Blocks
ASEAN – Asian Countries

17. Example of Trading Blocks
MERCOSUR – Common Market of the South
Latin American Countries

18. Example of Trading Blocks
BRIC – Brazil, Russia, India, China
GATT – General Agreements of Tariffs and Trade
WTO – World Trade Organization
IMF – International Monetary Fund
World Bank

19. SSEIN3
EXCHANGE RATES

20. Chickens 50 25 5 1
Hogs 10
1/5
Cows 2
1/25
Horses
1/2
1/10
1/50