1. Trade Problems Standard 12.2: Students analyze the elements of America’s market economy in a global setting Standard 12.6: Students analyze issues of international trade and explain how the U.S. economy affects, and is affected by, economic forces beyond the U.S. borders. SWBAT: Understand the terms of trade by doing trade problems correctly

2. Warm-up  What is specialization?  When will countries trade?  What will countries trade?

3. Terms of Trade: 1. No nation will trade unless it gains from the trade. 2. The terms of trade must fall between the domestic exchange equation of each nation.

4. United States South Korea  Equation of Exchange: AA in PCs: AA in DVDs: CA in PCs: CA in DVDs:

5. Trading Between Countries United States South Korea PCs DVDs 40 80

6. Answering the questions…  Terms of Trade: United States will trade 1 ________for more than _______ and less than __________. South Korea will trade 1 ______ for more than _____ and less than __________.

7. Try the next ones on your own!

8. Trading Between Countries Mexico France corn wheat 50 30 100 90

9. Answers:  AA in corn:  AA in wheat:  CA in corn:  CA in wheat  Terms of Trade Mexico will trade 1 _______ for more than _______ and less than _______. France will trade 1 _______ for more than _______ and less than _______.

10. Trading Between Countries China Canada shoes T-shirts 80 100 40 100 shoes T-shirts

11. Answers:  AA in shoes:  AA in t-shirts:  CA in shoes:  CA in t-shirts:  Terms of Trade Canada will trade 1 _______ for more than _______ and less than _______. China will trade 1 _______ for more than _______ and less than _______.

12. 3. Try Your Own!!! 1. Make up a trade problem of your own. 2. Get a classmate to check your problem and double check your answers. Get his/her signature on your paper to move on. 3. Due in 15 minutes!!!