1. Warm Up? Why do countries trade with each other?
Every country in the world has a limited amount of resources.

2. Vocabulary Interdependent- To depend on others in order to function.
Favorable Balance of Trade- A country exports more than it imports.
Unfavorable Balance of Trade- A country imports more than it exports.
Embargo- The refusal to trade with another country.

3. Which of the following would least affect the overall U.S. economy?
Terrorists successfully blow up a major U.S. oil pipeline and several major oil refineries.
The Supreme Court upholds a ruling that a huge corporation has established an illegal monopoly in a revolutionary new technology market and must be broken up.
Several airline pilots resign b/c they are tired of working in an unstable industry.
The president signs a bill lowering tariffs, thereby making it easier for products from other countries to be sold in the U.S.

4. U.S. & International Economies

5. The World US Economy Globally interdependent
Strongest and most influential in the world
However, because we have limited resources we cannot produce everything we need
Globally interdependent
People and nations all over the world depend upon one another for many goods and services

6. Foreign Trade Globalization World wide connection between countries.
Exports
Goods that a nation sells to other countries.
Imports
Goods that a nation buys from other countries.
Favorable balance of trade
When a country is exporting more than it imports.
A nation is receiving payment for more that it is spending on foreign products.
Unfavorable balance of trade
When a nation’s imports exceed its exports.
Absolute advantage
When one country produces a certain good better and more efficiently than anyone else.

7. Comparative Advantage
When a country can do a better job producing just about anything than the nation with which it trades, but in order to focus on producing the goods it is most efficient at, the country finds it in its best interest to import certain products rather than producing them itself.

8. Trade Restrictions Exchange Rate Australia 1.02 Canada 1.00 China 6.66
How much a given amount of money is worth in another nation.
Tariff
Tax on imported goods.
Used by governments to make domestic products more competitive
Embargo
Sanctions against a country that prevent two countries from trading with one another.
1973 OPEC oil embargo
Australia 1.02
Canada 1.00
China 6.66
Euro 0.76
India 45.14
Israel 3.62
Japan 83.90
South Korea 1,140.50
Mexico 12.45
United Kingdom 0.64

9. International Organizations
World Trade Organization (WTO)
International organization that establishes trade and resolves disputes
European Union (EU)
Trading union made up of 25 European countries
International Monetary Fund (IMF)
Oversees international financial system by monitoring exchange rates
United Nations (UN)
Int. diplomatic body that attempts to use diplomacy to resolve economic and political issues
North American Free Trade Agreement (NAFTA)
Trade agreement between Mexico, Canada & US. Allows US businesses greater access to foreign markets but also results in the loss of US jobs

10. Developing World Developed Nations Developing Countries World Bank
Countries that have greater wealth and a high standard of living
Developing Countries
Poorer nations that depend on foreign aid such as $, food, tech, capital, etc
World Bank
Provides advice and $ to developing nations

11. Political Issues that Affect Trade
Human Rights
The rights that every human being possesses
At times, the US has restricted trade with foreign countries because of their oppressive policies towards their people.
Ex: Cuba
This policy however, can be very inconsistent

12. Activity Questions/REFLECTION
Did your group have all of the resources needed to complete the tasks?
How did you get the things that you needed?
Would you have been able to complete the activity alone?
Are there any negative aspects to trading with foreign nations?