--Thomas Friedman It is the trend of businesses, technologies, or philosophies spreading throughout the world. It is characterized as a totally interconnected marketplace, unhampered by time zones or national boundaries ABSOLUTE ADVANTAGE Absolute Advantage is when a country can produce more of a good than another country using the same quantity of resources Investopedia video clip Investopedia video clip EOC study guide Globalization #2 ABSOLUTE ADVANTAGE Example: U.S. can produce 1,000 tons of wheat in a week Japan can produce 100 tons of wheat in a week In this case, who has the absolute advantage in wheat production? US! COMPARATIVE ADVANTAGE Comparative Advantage is specializing in the production of a good it can produce at a lower opportunity cost. Investopedia video clip Investopedia video clip EOC study guide Globalization #1 Comparative Advantage video Comparative Advantage video What is the definition of opportunity cost? a) The money you spend to buy something. b) The next best alternative that you give up. c) The chance that you will lose your money. d) All of the choices you could have made but didn't. What is the term to describe when a nation or individual can produce a good or service at a lower opportunity cost than another nation or individual? a) Specialization b) Trade c) Opportunity d) Comparative Advantage What does comparative advantage measure ? a) How much it costs to produce a good or service. b) How many resources a nation has. c) How much each nation gives up in one good to produce another good. d) None of these options COMPARATIVE ADVANTAGE When country A produces 1 unit of wheat, they give up producing a TV. In other words, Country As opportunity cost is a TV. When Country A produces 1 TV, the opportunity cost is 2 units of wheat. What are Country Bs opportunity costs? Production Possibilities Country ACountry B Wheat20050 TVs10050 ATK TIME! Trade creates wealth International trade agreements can lead to international prosperity and peaceful relationships North American Free Trade Agreement, NAFTA eliminated trade barriers between US, Canada, and Mexico Signed by President Bill Clinton in 1994 the overall value of intra-North American trade has more than tripled since the agreement's inception EOC study guide Globalization #5 European Union, EU over 28 member nations creates free-trade zones that reduce or eliminate trade barriers created a single currency EOC study guide Globalization #6 World Trade Organization, WTO negotiates new trade agreements resolves trade disputes From the average tariff in the US dropped from 59% to 5% EOC study guide Globalization #8 World Trade Organization, WTO Arguments against the WTO prioritizes trade and commercial considerations over all other values refuses to ban imports of goods made with child labor hurts the Third World Little to no government debt Low taxes and tariffs invite immigrants Increase in productivity EOC study guide Globalization #10 World Bank International Monetary Fund (IMF) Part of the United Nations Created member countries Headquarters in Washington, DC EOC study guide Globalization #9 Aims to reduce poverty in middle-income and poorer countries Provide low-interest loans and grants for Education Health Infrastructure Agriculture EOC study guide Globalization #9 Part of the United Nations Created member countries EOC study guide Globalization #7 Purpose is to promote the health of the world economy How? Maintain an orderly system of payments and receipts between nations Ensure the stability of exchange rates Facilitate international trade EOC study guide Globalization #7 cont Get with a partner and read through pages in the textbook. Create a two columned list describing the benefits and costs of globalization You MUST EXPLAIN---- GIVE EXAMPLES