2. Ch 10, 11, 12 - Slide 1 Learning Objectives 1.Explain 1.Explain why nations need to trade with each other. 2.Describe 2.Describe how currency exchange works. 3.Explain 3.Explain why countries and people specialize in producing goods and services. Why It’s Important Global trade doesn’t just influence business, it also affects all the countries and people of the world.

3. Ch 10, 11, 12 - Slide 2 The Global Marketplace The Global Economy is the interconnected economies of the nations in the world International trade involves exchanging goods and services between countries multinational corporation - company that does business in many countries and has facilities and offices around the world.

4. Ch 10, 11, 12 - Slide 3 Types of Trade Imports – G&S bought from another country Exports – G&S sold to another country Balance of trade - difference between how much a country imports and exports Exports > Imports = trade surplus Exports < Imports = trade deficit

5. Ch 10, 11, 12 - Slide 4 MAJOR EXPORTS AND IMPORTS OF THE UNITED STATES Source: Standard & Poor’s

6. Ch 10, 11, 12 - Slide 5 The Global Marketplace Countries specialize in resources they have What does the middle east specialize in? What do we specialize in? U.S. resources: human, natural, & production Comparative advantage – ability of a country or company to produce a particular good more efficiently than another country or company.

7. Ch 10, 11, 12 - Slide 6Currency - countries pay for other country’s products with currency. Currency is another name for money - types of $$: dollars, pesos, & yen - foreign exchange market is made up of banks where different currencies are exchanged - The exchange rate is the price at which one currency can buy another currency

8. Ch 10, 11, 12 - Slide 7 Exchange rates change from day to day and from country to country favorable exchange rate - value of a country’s currency goes up compared to another country’s unfavorable exchange rate - when the value of a country’s currency goes down compared to another country’sCurrency

9. Ch 10, 11, 12 - Slide 8 ???????????????????????? What is it called when a country exports more than it imports? Trade surplus The price at which one currency can buy another currency is called what? The exchange rate

10. Ch 10, 11, 12 - Slide 9 HOMEWORK Rd. Pgs. 169-173 ?’s 1-3 on Pg. 173

11. Ch 10, 11, 12 - Slide 10 Learning Objectives 1)State 1)State the advantages of protectionism and free trade. 2)Name 2)Name types of trade barriers. 3)Identify 3)Identify some of the major trade alliances in the world today. Why It’s Important Global trade doesn’t just influence business, it also affects all the countries and people of the world.

12. Ch 10, 11, 12 - Slide 11 Global Competition Protectionism - the practice of putting limits on foreign trade to protect businesses at home Trade barriers – put up to limit trade Tariff - tax on imports to increase their price Quota – limit on # of imported products Embargo - gov decides to stop an import/export

13. Ch 10, 11, 12 - Slide 12 Why Protectionism??? Foreign competition can lower the demand for products made at home Companies at home need to be protected from unfair foreign competition The use of cheap labor in other countries can lower wages or threaten jobs at home A country can become too dependent on another country for important products like oil or grain

14. Ch 10, 11, 12 - Slide 13 ????????????????????????? What is it called when there is a limit on the amount of imported goods? QUOTA

15. Ch 10, 11, 12 - Slide 14 Supporters of free trade believe there should be no limits on trade To reduce limits on trade more countries are forming trade alliances with each other Major Trade Alliances: NAFTA (North American Free Trade Agreement) European Union (EU) Association of Southeast Asian Nations (ASEAN)

16. Ch 10, 11, 12 - Slide 15 Why Free Trade??? It opens up new markets in other countries (300 million vs. 6 billion) It creates new jobs (global companies) Competition forces businesses to be more efficient and productive It promotes cultural understanding and cooperation between countries

17. Ch 10, 11, 12 - Slide 16 ??????????????????????? What is the major trade alliance in Europe called? The European Union

18. Ch 10, 11, 12 - Slide 17 HOMEWORK Review Key Concepts Pg. 174 Questions 2-5