2. The Global Marketplace

3. International Trade nInInInInternational trade involves the exchange of goods and services between nations. nGnGnGnGoods and services purchased from other countries are called imports. nGnGnGnGoods and services sold to other countries are called exports.

4. Why International Trade? Because nations are not self- sufficient, they find it advantageous to trade with each other. There are two types of advantages in international trade - Comparative and Absolute.

5. Comparative and Absolute n Comparative - the value that a country gains by selling the goods it produces more efficiently than other goods. n Absolute - when a country has special natural resources or capabilities to allow it to produce a given commodity at a lower cost than any other nation in the world.

6. GOVERNMENT INVOLVEMENT n All nations control and monitor their trade with foreign business. n All people and goods that enter the United States are search by U.S. officials. n Balance of Trade: the difference in value between exports and imports of an nation. n Positive: when a nation exports more than it imports. n Negative: imports more than exports.

7. TRADE BARRIERS n When a nation’s government wants to limit trade, it imposes trade barriers. These are controls that restrict the flow of goods.

8. BUSINESS INVOLVEMENT n While governments negotiate trade agreements, it is businesses that actually trade with one another.