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Published byCharlene Dixon Modified over 9 years ago
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7 th Grade Civics Miss Smith *pgs. 570-574 (21.4)
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Many countries specialize in producing certain kinds of goods and services Interdependence means that countries depend on each other for different goods and services
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Absolute advantage- country’s ability to produce something more cheaply than its trading partners Comparative advantage- country’s ability to make a product more efficiently Opportunity cost- value of the next best alternative that is given up when a country specializes
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Trade barrier- limit on the exchange of goods Also called protectionism Protects domestic jobs from foreign competition
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Tariffs Revenue tariffs raise money for the government Protective tariffs encourage people to buy domestically made products Import Quotas and Voluntary Restrictions Embargoes Bans trade with specific countries
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Reciprocal Trade Agreements Reduce protective tariffs Regional Trade Agreements Reduce or eliminate trade barriers International Trade Agreements World Trade Organization (WTO) The North American Free Trade Agreement (NAFTA)
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Reasons people support protectionism: To protect industries and jobs To maintain high wages To protect national security So as not to support countries with poor labor laws Reasons people oppose protectionism: Could harm the economy Lead to price increases
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Balance of trade- difference between the value of a country’s exports and its imports Trade surplus- when a country sells more than it buys Trade deficit- when a country buys more than it sells
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