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Transcript of 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace...
![Page 1: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/1.jpg)
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Chapter 9 part 1
International TradeThese slides supplement the textbook, but should not replace reading the textbook
![Page 2: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/2.jpg)
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All nations can increase productivity, lower prices, increase jobs and standard of living
Why trade with other nations?
![Page 3: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/3.jpg)
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Because the world’s resources are not evenly distributed around the globe
Why is trade advantageous for all countries?
![Page 4: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/4.jpg)
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Shifts in the Economy’s PPFAn increase in available resources
Foo
d
ClothingF F'
AA' Without
international trade
With international trade
![Page 5: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/5.jpg)
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A situation of national self-sufficiency in which there is no economic interaction with foreigners
What is Autarky?
![Page 6: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/6.jpg)
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12% of GDP is exported
How much do we export to other nations?
![Page 7: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/7.jpg)
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High techIndustrialAgriculturalEntertainment
What are the main products that we export?
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Manufacturedconsumer goods
Capital goodsOilMetals
What are key imports?
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14% the size of GDP is imported
How much do we import from other nations?
![Page 10: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/10.jpg)
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How much of one good exchanges for a unit of another good
What are theterms of trade?
![Page 11: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/11.jpg)
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It has something that other countries want
What gives a county’s currency value?
![Page 12: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/12.jpg)
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The demand and supply of that currency on the international market
What determines the value of a county’s currency
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Canada JapanMexicoGermanyGreat Britain
South Korea France Hong Kong Italy Brazil
Who are our main trading partners?
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Canada
Which country do we trade the most with?
![Page 15: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/15.jpg)
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Exports - an increase the export of machinery
Imports - an increase in the purchase of oil
What are changes in trade over the past 20 years?
![Page 16: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/16.jpg)
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Yes!By each country specializing in certain exports non-productive activity is lessened
Does specialization increase in productivity?
![Page 17: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/17.jpg)
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In those goods and services that it has a comparative advantage
What should a country specialize?
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Producing something with lower opportunity costs than others
What is comparative advantage?
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Producing something better than others
What is absolute advantage?
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It should produce those things in which it has a comparative advantage
What should a country produce?
![Page 21: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/21.jpg)
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Even if Americans were best at making wicker baskets our opportunity costs would be very high in this activity
What is an example of comparative advantage?
![Page 22: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/22.jpg)
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If a country has a comparative advantage in a product that product should be produced if the job can be done good enough
What is the good enough rule?
![Page 23: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/23.jpg)
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differences in resourceseconomies of scaledifferences in tastes
What are the reasons for international specialization?
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When the world price is ...> our price, export
< our price, import
= our price, will not trade
When will we trade?
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When the high wage worker is a lot more productive than the low wage worker
When would a high wage worker be cheaper than a
low wage worker?
![Page 26: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/26.jpg)
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• Infrastructure• Capital• Education• Skills • Attitude
What makes one worker more productive than
another? Better
![Page 27: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/27.jpg)
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There are good and bad reasons for trade restrictions
Why havetrade restrictions?
![Page 28: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/28.jpg)
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tariffsimport quotasexport subsidieslicensing agreementunreasonable standards
How do werestrict trade?
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Specific - applied to a specific good, like a barrel of oil
Ad Valorem- a percentage of the price of imports at the port of entry
What are two types of tariffs?
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An increase in pricesA decrease quantity in supplied
A lower standard of living
What are the effects of a tariff or quota?
![Page 31: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/31.jpg)
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The practice of selling a commodity abroad at a price that is below its cost or below the price charged in the home market
What is dumping?
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What are the three types of dumping?
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Predatory is when the purpose of dumping is to drive competitors out of the market, this is rareLong-term is when there are economic reasons that a product can be sold at a low price, for example, less competitionSporadic occurs when there are excess inventories
![Page 34: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/34.jpg)
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What are arguments for tariffs and quotas?
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National defense Protect infant industries Protect against predatory dumping Reduce unemployment Protect temporary declining industries Promote variety
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A development strategy that emphasizes domestic manufacturing of products that are currently imported
What is export substitution?
![Page 37: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/37.jpg)
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What are arguments against trade restrictions?
![Page 38: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/38.jpg)
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Leads to retaliation
Subsidizes weakness
Works against comparative advantage
Problems with policing & enforcing
Encourages rent seeking
![Page 39: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/39.jpg)
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A development strategy that concentrates on producing for the export market
What isexport promotion?
![Page 40: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/40.jpg)
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Treat all nations equallyReduce tariff rates Reduce import quotas
What is theGeneral Agreement on
Tariffs & Trade (GATT)?
![Page 41: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/41.jpg)
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1947 and there are presently 123 participating countries
When was GATT formed and how big is it?
![Page 42: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/42.jpg)
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NO, as of Jan.1, 1995 GATT was replaced by the World Trade Organization ( (WTO)
Is GATT still GATT?
![Page 43: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/43.jpg)
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A market in Europe begun in 1958 as a way of creating barrier-free trade in Europe
What is the Common Market?
![Page 44: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/44.jpg)
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Passed during the Clinton Administration to remove barriers of trade with Mexico
What is North American Free Trade Agreement
(NAFTA)?
![Page 45: 1 Chapter 9 part 1 International Trade These slides supplement the textbook, but should not replace reading the textbook.](https://reader035.fdocuments.net/reader035/viewer/2022062717/56649e2d5503460f94b1ccdc/html5/thumbnails/45.jpg)
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