1. Trade Vs. Domestic

2. Resource Distribution Resource Distribution –Not every country has the resources to meet what their citizens demand In order to get those items, we must trade In order to get those items, we must trade –Specialization The idea that a country will produce only certain goods or services rather than all of them The idea that a country will produce only certain goods or services rather than all of them Determined by natural resources and human and physical capital Determined by natural resources and human and physical capital Opportunity cost Opportunity cost –Kate and Carl figures on p. 443-445 figures on p. 443-445

3. Trade vs. Domestic Trade barriers and Agreements Trade barriers and Agreements –Trade barriers are means of preventing a foreign product or service from freely entering a nations territory Import quotas- limit on amount of a good coming in to the country Import quotas- limit on amount of a good coming in to the country Voluntary export restraints- self imposed limitation on the number of products shipped to another country Voluntary export restraints- self imposed limitation on the number of products shipped to another country Tariffs- taxes on imported goods Tariffs- taxes on imported goods

4. Trade Vs. Domestic Protectionism Protectionism –The use of trade barriers to protect industries from foreign competition Protects jobs Protects jobs Protects infant industries Protects infant industries –New industry that needs time to develop Safeguards national security Safeguards national security –Industries that are vital to our safety

5. Trade vs. Domestic Trade Agreements Trade Agreements –Agreements between countries that reduce trade barriers and tariffs to promote trade Reciprocal Trade Agreement Act Reciprocal Trade Agreement Act World Trade Organization World Trade Organization European Union European Union NAFTA NAFTA