Globalization and Interdependence

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Globalization and Interdependence
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1.) The Business Cycle Quiz
___________
___________
___________
___________
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•  
• 2.Which is NOT an economic indicator?
• a. GDP b. Unemployment
• c. PPI d. Starving Population
• 3. The amount of final goods a country produces
  is known as what?
• a. GDP per capita b. PPI c. CPI d. GDP
• 4. Because prices of goods have continually gone
  ______, our country is suffering from
  _________________.
• a. up, inflation b. down, inflation c. up,
  deflation d. down, deflation
• 5. If there is a BULL market, which phase of the
  business cycle are we likely in?
• a. Expansion b. Contraction c. Trough d. Boom

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• ____6. Which type of voting occurs when a person
  plans to vote for every Democrat on the ballot?
• A split ticket b. A straight ticket c. A strong
  ticket d. A short ticket
• ____7. Which election allows voters to choose a
  candidate to represent their party?
• closed election b. general election c.
  open election d. primary election
• ____8. In which type of primary election can
  members of either party vote?
• Closed b. Open c. Split d. Straight
• ____9. How are caucuses different from primary
  elections?
• Caucuses are meetings of voters where discussions
  and support for candidates can be debated
• Primaries can only be held after the general
  election
• Primaries are only used in large states where
  voters select candidates at the same time.
• Caucuses do not have the power to designate a
  political candidate as a party's caucus winner.
• ____10. If no presidential candidate obtains a
  majority in the Electoral College, how is the
  president chosen?
• The former president appoints the new president
• The House of Representatives chooses the
  president
• The Senate chooses the president
• The winner of the popular vote becomes president

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Goals

• Explain how people and businesses are
  interconnected by the world economy.
• Explain the impact of interdependence on the
  world.

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Warm-Up

• Look at a tag on something you are wearing.
  Where did it come from?
• Where else do you think most of the items you own
  come from?

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Key Terms

• Globalization political and economic connections
  and communication.
• Impact Nations depend on one another for goods.
  You have sneakers from China and a shirt from
  Vietnam.

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What does the word dependent mean?
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• Interdependence Countries are dependent on one
  another for goods/services/resources. They focus
  on producing what they are best at, and export it
  to other countries.
• Impact America produces financial services but
  is dependent on China for TVs, Clothes, Shoes,
  MP3s.
• Dependence means you rely on someone or something
  else

Well set up good banks for you if you give us
TVs!
OK! Deal.
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What is the US Dependent on?
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More Key Terms

• Favorable Balance of Trade Export more than you
  import.
• Why do you want to export more than you import?
• Impact Because America imports more goods from
  China than we export to China we have an
  UNFAVORABLE balance of trade with China.

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Favorable or Unfavorable?

• Look at the table, how would you describe the US
  trade with Japan in 2009?

Exports Imports Balance
12,653,400,000 21,676,700,000 -9,114,300,00
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Favorable or Unfavorable?

• Look at the table, how would you describe the US
  trade with Japan in 2009?

Exports Imports Balance
12,653,400,000 21,676,700,000 -9,114,300,00
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More Key Terms

• Comparative Advantage A country should
  specialize in producing the goods and services it
  is best at producing, and trade for other
  goods/services.
• Impact Germany produces cars because it is
  better at producing cars than computers. It has
  a comparative advantage in car production and
  imports computers from Japan.

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We USED to have a comparative advantage when it
came to producing cars.. What happened?
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Protection or trade barriers?

• Subsidies Govt money given to producers, to
  reduce the cost of production.
• Impact increases production (supply), decreases
  price so that other countries want to buy the
  products.
• Example US rice farmers get a subsidy, rice
  production goes up, price of rice goes down,
  Kenya and France now buy rice from the US.
• Subsidies have been used a lot to encourage
  farmers to grow corn as an alternative fuel
  source

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Protection or trade barriers?

• Tariffs Taxes on imported goods
• Impact tariffs make consumers buy cheaper
  domestic goods over more expensive foreign
  products. Helps out our own industries.
• Example in the 1980s all Japanese cars had
  tariffs, so people bought more American cars
• Do Tariffs make countries more or less likely to
  want to trade? Why?

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Protections or Trade Barriers?

• Quotas A limit on the amount of goods you can
  import from a certain country.
• Impact protects domestic industry from cheap
  foreign goods.
• Ex The US can only import 621,780 kg of cotton
  from China
• What is the impact
• of this on trade?

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Protections or Trade Barriers?

• Embargoes When the govt makes it illegal to
  trade with another nation.
• Impact Hurts the nation that cannot receive
  goods, often the people who live there suffer.
• Example US will not trade with Cuba b/c it is
  communist

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US Embargo on Cuba

• U.S. Trade Embargo against Cuba. It is illegal
  to trade with companies in Cuba, we disagree with
  the communist ruler Fidel Castro and his
  government. We are hurting Cuba economically by
  not trading and raising the living standards of
  the country.

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Regulation VS. Deregulation

• Regulation govt puts limits or rules on
  business.
• Deregulation govt REMOVES limits/rules on
  business (better for free trade)
• So, what are embargos, tariffs, and quotas all
  examples of?

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International Free Trade Organizations

• There are also world-wide organizations that
  exist to reduce the barriers to trade.

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NAFTA

• North American Free Trade Agreement
• NAFTA impacts the USA because its goal is to
  eliminate all tariffs and trade barriers between
  Canada, the USA and Mexico by the end of 2009.

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EU

• European Union
• 27 European countries are members.
• Ensures the free flow of capital, people, goods
  services.
• No Tariffs between member countries
• All have a common currency (Euro)

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(No Transcript)
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EU Flag
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WTO

• World Trade Organization
• To be part of the WTO you have to agree to reduce
  tariffs eliminate quotas.

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WTO Members nations in dark blue
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OUR WORLD TRADE GAME

• There are 8 different colors of paper. You are
  trying to get 1 of each piece in your possession.
  In order to do so, you much trade one piece for
  one piece with other people. There will be four
  rounds of trading.
• You WIN the game when you have 8
• pieces of paper that are of all 8 colors
• PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
  ORANGE

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 1 You can ONLY trade with the person Mr.
  Egan says you can, and you can ONLY trade one
  color.

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 2 You can ONLY trade with the person Mr.
  Egan says you can, but you can now trade ANY
  color.

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 3 You can trade with anyone at your TABLE,
  but you can only trade ONE color

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 4 You can trade with anyone at your TABLE,
  but now you can trade any color

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 5 You can trade with anyone in the ROOM,
  but you can only trade one color.

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PINK, GREEN, PURPLE, WHITE, BLUE, YELLOW, BLACK,
ORANGE

• ROUND 6 You can trade ANYTHING with ANYONE

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• How is a tariff best described?
• A tax on imports
• Contributing to a favorable balance of trade
• Comparative advantage
• A violation of human rights

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• What does the principle of comparative advantage
  govern?
• Developed countries
• Multinational corporations
• The United Nations
• International Trade

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• 3. Which organization/ country would matter most
  when it came to helping out free trade?
• The United Nations
• The United States
• NAFTA
• Canada

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• 4. Which of the following is NOT an example of a
  trade barrier?
• Tariff
• Quota
• Comparative Advantage
• Embargo

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• 5. How do American Consumers benefit from
  international trade?
• They have access to goods that are scarce in this
  country
• They have a trade surplus that increases savings
• They have lower opportunity costs
• They have an absolute advantage in producing some
  goods

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• 6. Why might Japan impose high tariffs on America
  automobiles imported into Japan?
• To increase US sales of Japanese cars
• To encourage American auto makers to make better
  cars
• To increase imports of American cars
• To limit competition in Japan from American cars