1. International Economics
What do you already know about Global Economics? Scan code & answer

2. Global Economy
Most countries are somehow involved in other country’s affairs (foreign policy)
The United States in the World’s “Super Power” – measured by military, economic growth, and stability.
Internationalism – involved in other world matters (we are not isolated).
The U.S. no longer self-sustains itself (we are not subsistent) – we rely on other country’s to help maintain our economy.

3. Trade
One way the U.S. is involved in international economics is through TRADE
TRADE = exchange of goods, currency, resources
We trade certain goods for other goods from other countries OR we exchange MONEY for goods from other countries. Foreign countries also exchange their goods or money for ours.

4. What is Trade? The exchange of goods/services/money between countries
Exports – items produced by YOUR country to be sent to other trading countries
Imports – items purchased by YOUR country that were made in another country and sent here for trade

5. World’s Largest Exporters
1 China $ 2,210,000,000,
— European Union $ 2,173,000,000, est.
2 United States $ 1,575,000,000, est.
3 Germany $ 1,493,000,000, est.
4 United Kingdom $ 813,200,000, est.
5 Japan $ 697,000,000, est.
6 France $ 578,600,000, est.
7 Netherlands $ 576,900,000, est.
8 South Korea $ 557,300,000, est.
9 Russia $ 523,275,000, [3]
10 Italy $ 474,000,000, est.
11 Canada $ 458,700,000, est.
12 Spain $ 458,000,000, est.
13 Singapore $ 518,900,000, est.
14 Saudi Arabia $ 376,300,000, est.
15 Mexico $ 370,900,000, est.

6. World’s Largest Importers
1 United States $ 2,380,000,000, est.
- European Union $ 2,112,000,000, est.
2 China $ 1,950,000,000,
3 Germany $ 1,233,000,000, est.
4 United Kingdom $ 782,500,000, est.
5 Japan $ 766,600,000, est.
6 France $ 659,800,000, est.
7 South Korea $ 514,200,000, est.
8 Netherlands $ 477,800,000, est.
9 Canada $ 471,000,000, est.
10 India $ 467,500,000, est.
11 Italy $ 435,800,000, est.
12 Spain $ 431,000,000, est.
13 Singapore $ 463,800,000, est.
14 Mexico $ 370,700,000, est.
15 Russia $ 341,700,000, est.

7. Balance of Trade
Balance of Trade – the relationship between a country’s imports and exports
Negative Trade Balance – occurs when you import more than you export – this can lead to a fall in one’s currency value
Also called a Trade Deficit
Positive Trade Balance – occurs when you export more than import
Also called a Trade Surplus
Balanced Trade – occurs when they equal out
United States currently has a negative trade balance – however, a great part of that has to do with American Companies moving overseas, so in reality we are importing many American goods.

8. Balance of Trade
Positive Trade Balance – occurs when you export more than import
Also called a Trade Surplus
Balanced Trade – occurs when they equal out
United States currently has a negative trade balance – however, a great part of that has to do with American Companies moving overseas, so in reality we are importing many American goods.

9. What is our Balance of Trade
What type of balance do we have with China?
This reflects our exports to China and our imports from China
Month
Exports
Imports
Balance
January 2015
9,552.0
38,158.4
-28,606.4
TOTAL 2015

10. Balance of Payments
Balance of Payments - are an accounting record of all monetary transactions between a country and the rest of the world.
These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers
Without a balance of payments there can be a large gap between countries (1st World, 3rd World)

11. Reasons for trade
Scarcity – limited supplies to meet unlimited wants and needs
No country has all of everything
Factors of production are limited!
Trade occurs because one side has a COMPARATIVE ADVANTAGE in a certain product
Comparative Advantage – lowest opportunity cost

12. Absolute v. Comparative
Absolute Advantage tells us that one person is simply better at producing certain items than another
Comparative Advantage tells us that people should SPECIALIZE in certain areas and then trade for the other items – both sides win

13. Benefits of Trade Greater consumer choice
Better skilled labor (specialization)
Lower opportunity cost
Equalizes some of the unequal distribution of resources (some countries simply cannot produce products b/c they lack the resources)
Better use of resources – less waste
Lower labor cost (producer benefit)

14. Costs of Trade Unemployment Conflicts Dependences on another nation
Fall of self-sufficiency
Lower wages

15. Trade Simulation
How do you feel about trade?