Witty International School

Pawan Baug
Cambridge International Center(Regn No :- IN570)
Pawan Baug, Off S. V. Road,
Malad (W), Mumbai - 400 064
Tel. 02241756800.
Email:- wis@wittykidsindia.com
www.wittykidsindia.com

International Trade

From : 1 / 11 / 2023 To : 30 / 11 / 2023

Periods : 7q

Periods Duration : 45 Minutes

Subject : ECONOMICS Class / Grade : Grade IGCSE -II Year : 2023-

2024

Topic Plan
Sr. No Topic SubTopic
1. The Structure of the Balance of Payments.
2. Free Trade and Protection.
Topic Plan Details

[ 1 ] The Structure of the Balance of Payments. From : 1 / 11 / 2023 To : 3 / 11 /

2023 Periods : 3 Periods Duration : 45 Minutes

Previous Knowledge

Basic Understanding: Students might already know that countries engage in international
trade and financial transactions. They might have a basic understanding that exports and
imports are involved in international trade. They may also be familiar with the concept of
exchange rates and that different currencies have different values.

Currency Exchange: Students may understand that when they travel to another country,
they need to exchange their home currency for the local currency. This might lead them to
think about how countries exchange currencies for their international transactions.

Trade Balance: Students could have a basic grasp of trade balance, knowing that when a
country sells more goods and services to other countries (exports) than it buys from them
(imports), it's generally seen as positive for the country's economy.
Importance of International Trade: Students might recognize that international trade is
crucial for a country's economic growth and development. They might have heard about
terms like "exports create jobs" and "trade deficits can be concerning."

Currency Conversion: Students could be aware that when the value of their home
currency changes compared to another country's currency, it affects the cost of imported
goods and the competitiveness of their country's exports.

Global Economy: Students might have a basic understanding that countries interact in a
global economy, and these interactions involve money, goods, and services flowing across
borders.

Possible Misconceptions:

• Some students might assume that a trade deficit is always a bad thing for a country
without understanding the broader context.
• They might think that the value of a currency is determined solely by a country's
economic performance.

Potential Knowledge Gaps:

• Students might not be aware of the detailed breakdown of transactions within the
BoP components.
• They might not understand the significance of capital flows, financial investments,
and how these impact a country's economic stability.

SetInduction

1. Introduction to Balance of Payments (10 minutes)

o Begin the lesson with a brief discussion about international trade and
financial transactions.
o Introduce the concept of Balance of Payments as a record of a country's
economic transactions with the rest of the world.
o Explain that the BoP is like an accounting balance sheet for a country's
international transactions.
2. Components of Balance of Payments (15 minutes)
o Discuss the three main components of the BoP: Current Account, Capital
Account, and Financial Account.
o Current Account: Explain that this account records transactions related
to the trade of goods and services, income flows, and unilateral transfers.
o Capital Account: Describe this account as the record of non-financial
assets and capital transfers.
o Financial Account: Explain that this account includes transactions
involving financial assets and liabilities.
3. Breaking Down the Current Account (15 minutes)
o Divide the class into small groups.
 o Distribute handouts with examples of transactions (e.g., exports, imports,
tourism spending, remittances).
o Have each group categorize the transactions into the appropriate sub-
accounts within the Current Account.
o Discuss the examples as a class, clarifying any questions.
4. Analyzing Balance of Payments Imbalances (10 minutes)
o Explain the concept of a surplus and a deficit in the Balance of Payments.
o Discuss the potential implications of having a trade surplus or deficit on a
country's economy.
o Highlight the connection between the BoP and a country's exchange rate.
5. Significance of a Balanced BoP (10 minutes)
o Facilitate a class discussion on the importance of a balanced BoP for a
country's economic stability.
o Explain how a consistent deficit or surplus could lead to potential
challenges such as currency depreciation, inflation, or debt accumulation.
6. Real-World Examples (10 minutes)
o Provide examples of countries that have faced BoP challenges and the
economic consequences they experienced

Learning Objectives

By the end of this lesson, students should be able to:

1. Define and explain the concept of Balance of Payments (BoP).

2. Identify and categorize transactions within the BoP.
3. Understand the significance of a balanced BoP for a country's economy.

Teaching and Learning Aid

• Whiteboard and markers

• Projector and screen (optional)
• Handouts with example transactions

KeyTerminology

1. Balance of Payments (BoP): A systematic record of all economic transactions

between the residents of a country and the rest of the world over a specific
period typically a year.
2. Current Account: The component of the BoP that records transactions
involving the exchange of goods services income and unilateral transfers. It
includes:
o Trade Balance: The difference between the value of a country's exports
and imports of goods.
o Services Balance: The difference between the value of services
exported and imported.
 o Income Balance: The difference between income earned from abroad
and income paid to foreign residents.
o Unilateral Transfers: Gifts aid or transfers made by one country to
another without expecting anything in return.
3. Capital Account: The component of the BoP that records transactions related
to non-financial assets and capital transfers. It includes:
o Capital Transfers: One-time transfers of ownership of an asset.
o Non-produced Non-financial Assets: Includes items like
patents copyrights and natural resource rights.
4. Financial Account: The component of the BoP that records transactions
involving financial assets and liabilities. It includes:
o Direct Investment: Investment in foreign businesses or assets that
allow for significant control.
o Portfolio Investment: Investment in foreign financial assets like
stocks and bonds without control.
o Other Investment: Transactions involving short-term borrowing and
lending trade credit etc.
o Reserves: Changes in a country's official reserve assets (like foreign
exchange reserves).
5. Trade Surplus: When a country's exports of goods and services exceed its
imports resulting in a positive balance in the current account.
6. Trade Deficit: When a country's imports of goods and services exceed its
exports resulting in a negative balance in the current account.
7. Exchange Rate: The value of one country's currency in terms of another
country's currency. Exchange rates affect the value of imports and exports.
8. Devaluation: A deliberate decrease in the value of a country's currency in
relation to other currencies often done to improve trade balance.
9. Revaluation: A deliberate increase in the value of a country's currency in
relation to other currencies.
10. External Debt: The amount of money a country owes to foreign creditors. It
can include government debt corporate debt and household debt.
11. Reserve Currency: A widely accepted currency that is held in significant
quantities by governments and institutions as part of their foreign exchange
reserves.
12. Fixed Exchange Rate: An exchange rate regime where a country's currency is
set at a fixed value in relation to another currency or a basket of currencies.
13. Floating Exchange Rate: An exchange rate regime where a currency's value is
allowed to fluctuate based on the foreign exchange market's supply and demand.
14. Pegged Exchange Rate: An exchange rate regime where a country's currency
is tied to the value of another currency or a basket of currencies but with some
flexibility within a certain range.
15. Balance of Payments Disequilibrium: A situation where a country's BoP is
not balanced meaning there is either a surplus or a deficit in one or more of the
accounts.
Plan HomeWork

Homework:

• Assign readings or research on recent BoP situations in different countries.

• Have students prepare a short written reflection on the significance of a
balanced BoP for a country's economic well-being.

Plan ClassWork

1. Group Activity: Case Studies (15 minutes)

o Assign small groups a specific country and its recent BoP situation
(surplus, deficit, balanced).
o Have each group research and present the causes and potential effects of
that country's BoP situation.

Conclusion:

• Summarize the key points discussed during the lesson.

• Emphasize the importance of understanding the Balance of Payments in
comprehending a country's economic health and stability.
[ 3 ] Free Trade and Protection. From : 5 / 11 / 2023 To : 8 / 11 / 2023 Periods :
4 Periods Duration : 45 Minutes

Previous Knowledge

1. Supply and Demand: Understanding the fundamental economic principle of

how the availability of goods and services and the demand for them interact to
determine prices.
2. Market Economy: Understanding the basic tenets of a market economy,
where prices are determined by the forces of supply and demand without
significant government intervention.
3. Comparative Advantage: Grasping the concept that a country should
specialize in producing goods or services where it has a lower opportunity cost
compared to other countries.
4. Specialization: Recognizing the benefits of countries or individuals focusing
their efforts on producing specific goods or services in which they have a
comparative advantage.
5. Gains from Trade: Understanding the idea that both parties involved in a
trade can benefit from the transaction, as each gets access to goods or services
they wouldn't have otherwise.
6. Trade Balances: Understanding the concept of the balance of trade, which
refers to the difference between a country's exports and imports and its
implications for the economy.
7. Economic Integration: Understanding the process of integration between
different national economies, often through the reduction of trade barriers and
the establishment of economic agreements.

SetInduction

Introduction:

1. Begin by asking students if they have any prior knowledge of free trade and
protection. Encourage discussion and write down any key points on the board.
2. Introduce the concept of free trade and protection, explaining their
significance in global and domestic economies.

Main Activity:

1. Divide the class into two groups: one representing advocates of free trade, and
the other representing advocates of protectionism.
2. Provide each group with articles or case studies supporting their respective
stances.
3. Ask each group to prepare a short presentation highlighting the benefits and
drawbacks of their chosen economic approach.
 4. Facilitate a debate between the two groups, encouraging each side to defend
their position with evidence from their research.

Learning Objectives
To help students understand the concepts of free trade and protection, and their impact
on the economy.

Teaching and Learning Aid

• Whiteboard or chalkboard
• Markers or chalk
• Printed handouts of relevant articles or case studies on free trade and
protection
• Computer and projector for multimedia presentations (optional)

KeyTerminology

1. Import Quotas: Restrictions imposed on the quantity of a particular good

that can be imported into a country during a specified period.
2. Subsidies: Financial assistance or grants provided by the government to
domestic industries to make them more competitive against foreign imports.
3. Dumping: The practice of selling goods in a foreign market at a price lower
than their cost of production often with the aim of driving out competition.
4. Trade Barriers: Any obstacle that restricts the free flow of goods and
services between countries including tariffs quotas and non-tariff barriers.
5. Protectionist Policies: Government measures and regulations designed to
protect domestic industries from foreign competition.
6. Nationalism: A political ideology that emphasizes the interests of a particular
nation or state often influencing protectionist trade policies.
7. Retaliation: Countermeasures taken by a country against another in response
to protectionist policies often leading to trade wars and escalating tensions.

Plan HomeWork
Assign a short essay or research project where students can explore a specific case
study related to free trade or protectionist policies in a particular country or industry.
Encourage them to analyze the effects of these policies on the economy and relevant
stakeholders.
Evaluate student participation in the debate and class discussion, as well as their
understanding of the concepts demonstrated in their homework or essay assignments.
Use a rubric to assess their critical thinking, research, and communication skills.

Plan ClassWork
 1. After the debate, facilitate a class discussion on the advantages and
disadvantages of both free trade and protectionism.
2. Address any questions or concerns that arise during the discussion.
3. Summarize the key points and emphasize the importance of finding a balance
between free trade and protection in the global economy.

1. Conclude the lesson by highlighting the real-world implications of free trade

and protectionist policies.
2. Encourage students to stay informed about current economic policies and
global trade agreements.

Divide students into small groups.

1. Assign each group a specific industry (e.g., electronics, agriculture, textiles).

2. Instruct each group to research and discuss how international specialization
has impacted their assigned industry.
3. Groups should prepare a short presentation highlighting the benefits,
challenges, and implications of international specialization in their industry.

Group Presentations and Discussion (15 minutes):

1. Have each group present their findings to the class.

2. Encourage class discussion after each presentation, addressing questions and
insights raised by the presentations.

Conclusion (10 minutes):

1. Summarize the key points discussed during the lesson.

2. Highlight how international specialization contributes to the global economy.
3. Emphasize the importance of understanding international economics for
informed citizenship.