Introduction to Macroeconomics Chapter 2. Opportunity Cost, Specialization, and Trade.
Trade and Economic Growth SW Asia Unit 3. Voluntary Trade Factors involved in Voluntary Trade 1....
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Transcript of Trade and Economic Growth SW Asia Unit 3. Voluntary Trade Factors involved in Voluntary Trade 1....
Trade and Economic Growth
SW Asia Unit 3
Voluntary Trade
Factors involved in Voluntary Trade1. Specialization2. Trade Barriers3. Currency Exchange4. Control of Supply
SpecializationDefine:-specialization: The products a country makes best and
are demand in the world market.
-interdependence: A relationship between countries in
which they rely on one another for resources, goods, or services.
Specialization Think- Pair-Share
Example:
Specialization
EQ: How does specialization encourage trade between countries?
If a country produces the goods they can make most efficiently, that country can trade them for goods made by others that cannot be produced locally.
Trade Barriers
Definition:The prevention of free trade
Trade Barriers
Physical Trade Barriers: (give 2 examples)
-mountains-deserts-lack of rivers, bodies of water
Trade BarriersPolitical Trade Barriers:-tariffA tax placed on goods when they are brought
(imported) into one country from another country.
-quotaA limit to the number of amount of a foreign-
produced goods that is allowed into a country.
-embargoA formal halt to trade with a particular country
for economic or political reasons.
System for Exchanging Currency
Define:-currency:Paper or coins that a country uses for its
money supply. -international trade:Countries trading with each other to
obtain resources, goods, and services. -exchange rate:A system of changing one type of
currency to another.
System for Exchanging Currency
Why does international trade require a system for exchanging currency between countries?
So that it is possible to buy and sell goods between nations with different types of money.
OPEC
Organization ofPetroleumExportingCountries
OPEC
Define-supply: The amount of a good or service
available for sale in a market.-demand: The amount of a good or service
wanted in a market.
OPEC
What is the primary function of OPEC?
To control the supply and price of oil.
OPEC
Give some examples of what petroleum (oil) is used for:
carslawn mowersmachineryto make plastic products
Economic Growth
4 Factors that influence Economic Growth
1. Labor2. Capital Goods3. Land(resources)4. Entrepreneurship
Relationship between human capital and GDP
Define:-GDP:
Gross Domestic Product
The value of all goods and services produced within a country in a given year and converted into US dollars for comparison.
Relationship between human capital and GDP
-human capitalThe knowledge and skills that make it possible for workers to earn a living producing goods or services.
Relationship between human capital and GDP
Companies that invest in human capital are more_____________________.
Countries that invest in human capital have ______________________GDP’s because_______________________
profitable
higherthey invest in educating and training their citizens.
Relationship between human capital and GDP
Think- Pair-Share
Example:
Relationship between capital goods and GDP
Define:-capital goodsThe factories, machines, and
technology that people use to make products to sell.
3 examples of capital goods:- oil producing technology- communications equipment - assembly line machinery
Relationship between capital goods and GDP
Companies that invest in capital goods are more__________.
Countries that invest in capital goods have _________________ GDP’s because_________________________
profitable
higher they can produce more goods in a quicker and efficient way.
Relationship between capital goods and GDP
Think-Pair-ShareExample:
The Role of Oil in SW Asia Economy
Another name for oil is_____________.petroleum
The Role of Oil in SW Asia Economy
Countries WITH oil in SW Asia tend to have:
Countries WITHOUT oil (except Israel) tend to have:
•Higher GDP•Higher standard of living
•Lower GDP•Lower standard of living
The Role of Oil in SW Asia Economy
Israel has very little _____. However, Israel has a ____________________because they invested in ________
and ___________ goods for ___________and _______________ industries.
oilhigh GDP
humancapital technologycommunication
Entrepreneurship
Define:-entrepreneurCreative, original thinkers who are
willing to take risks to create new businesses and products.
Entrepreneurship
An entrepreneur is willing to take a_____
in order to make a________________.
risk
profit
Entrepreneurship Think-Pair-Share
Example
Answer EQ’s
Paragraph form- use all of the vocabulary that are in your graphic organizers:
1. What factors encourage economic growth?
2. What factors encourage trade between countries?