Professional Documents
Culture Documents
Date: _____________________
Title/Topic: Unit 9: International Trade/Global Economy Subject: ___________________
Period: ____________________
▪ Mastery Objective: Students will be able to explain growing economic interdependence, the effects of
international trade agreements and the World Trade Organizations by completing research, internet activities,
article reviews and classroom activities.
▪ ESSENTIAL QUESTION: Should free trade be encouraged? How has globalization made countries more
interdependent? Has NAFTA been great for the US Economy?
Study Questions Student Notes
Explain how resources - Nations trade becuase of lack of natural resource
are distributed? - each nation specializes in certain products
- Natrual resources, capital(human+physical), and labor determine what goods and
services an economy will produce
How are trade and - nations specialize in certain goods= cannot produce through
specialization linked? importation/exportation
- most nations non self sufficient
- better to trade than mass produce in a single country
Compare and Contrast - absolute advantage- can produce more of a products than another nation using a
absolute advantage limited amount of reoure
and comparative - comparative advantage- the product can be produced more effeciently
advantage. - mutually benefits both parties
- Law: each person should produce the good for which they have a lower
opportunity cost
A nation is better off when it produces g&s when it has a compartive advantage
How is the world
becoming more - Countries are able to obtain goods that have a high opportunity cost
interdependent? - result→ 1 country can use $ earned from export to import other g&s it cannot
produce
- Groth internationally leads to < economic interdependence
- countries are interdependent→ changes in oe countries economy
infleunces othr countries
How does trade affect - Trade= countries specilize in a product→ limited goods+ change in employemnet
employment? rate
- unemployment
Explain trade - trade barrier; trade restriction- prevents forign product/service from free entry into
barriers? How do nation
tariffs limit trade?
- tariffs- tax on g&s being imported, government issued
-
Explain sanctions and - Sanctions- any action taken by a nation(s) to harm another nations economy to
embargoes? inforce political change
- safeguard national secutiry→ makes U.S. steel, energy, and advanced tech
industries remain active in he event of wat
Explain the WTO, EU, - International trade agreemenents= encourage free trade
and NAFTA.
- World trade Organization(WTO): est.1995; goal=making global trade more
free
- North American Free Trade(NAFTA): created free trade zone linking the US,
CA, and MX
Why are foreign - changing money from one nation’s currency is seldom(like one peso=one dollar)
exchange rates - nation’s currency in relation to foreign currency=exchanged rate
necessary? What is - convert prices in one currency to prices in another
the difference - an increase in the value of currency=appreciation
between a strong - country is stronger
currency and a weak - a strong dollar leads consumers to purchase more imported goods
currency? - decrease in value of currency=depreciation
- country is weakening
Explain causes and - exchange rates can affect a nation’s balance of trade
effects of the US trade - nations seek maintenance of trade by avoiding trade suplus/deificit
deficit? - balance= nation can protect the value of its currency on the international rate
- country contiunilly imports> exports→ value of its currency falls
- can be corrected by limiting imports or increasing number/value of exports
- deficits cause people of other countries to own a large part of the economy
- to reduce trade deficit= government depreciates the exchange rate→ results in rise
of exports and fall in imports
Government cuts back spending by adjusting its monetary or fiscal policy
Summary:
The global economy is innately tied to trade; it allows countries around the world to obtain any resource they may
want, whether or not it is produced on the home front. This availability of resources is facilitated through trade.
International trade allows countries to expand their markets and access goods and services that otherwise may not
have been available domestically. As a result of international trade, the market is more competitive. This ultimately
results in more competitive pricing and brings a cheaper product home to the consumer.