CHAPTER 10Business in a Global

Economy

Global Producers and ConsumersRead:

You may not know it but you’re a part of the global marketplace. You might buy clothes made in Taiwan. Turnover your alarm clock and you may see a sticker that reads, “Made in Indonesia”. In the future, you might work for a French company in the United States or for an American company in Paris. During the last 20 years, the US and other nations have greatly relied on one another’s goods and services to stay prosperous.

Read:

The global marketplace exists anywhere business crosses national borders. Most countries don’t produce everything their citizens want. A country might not have the necessary resources, it might not have the technology, or perhaps it’s not interested in making the product. However, countries can satisfy their citizens’ wants and needs by buying goods in the global market. A consumer, citizen, employee, and business leader of the twenty-first century must have an understanding of international trade and business in order to be an informed decision maker.

Global Producers and Consumers

The Global Marketplace Multinational corporation:

company that does business in many countries and has facilities and offices in many countries around the world.

Specialization Countries specialize in producing

certain goods and services.

By specializing, countries can sell what they produce best so they can buy the products they need from other countries.

The resources available to a country often influence what it specializes in producing. Example: a country with little money or

technology but a large population might specialize in manual labor.

Types of Trade Trade: sale and exchange of

goods and services between a buyer and a seller. Can be individuals or countries.

Imports: goods and services that one country buys from another country.

Exports: goods and services that a country sells to another country.

Types of Trade Other types of trade include:

InvestmentExchange of human resourcesTourismMilitary aidLoans

Currency Currency is another name for money. Just as countries use different

languages, they use different currencies. Examples:

Americans use dollars Mexicans use pesos Japanese use yen

Foreign exchange market – made up of banks where different currencies are exchanged

Exchange Rates Different currencies have different

values compared to each other.

Exchange Rate: price at which one currency can buy another currency.

Exchange rates change from day to day and from country to country. How much the currency of a country is worth depends on how many other countries want to buy its products.

Prices Favorable exchange rate: when the

value of a country’s currency goes up compared to another country’s

Unfavorable exchange rate: when the value of a country’s currency goes down compared to another country’s

A country with a favorable exchange rate can buy more of the other country’s products.

Balance of Trade Balance of trade: difference in the

value between how much a country imports and how much it exports.

Trade surplus: when a country exports more than it imports

Trade deficit: when a country imports more than it exports

World Trade Organization

WTO is the only global international organization that deals with the rules of trade between nations.

World Trade Organization

Activity1. Each student should find something

they have with them that was made in another country.

2. Place an x on the Smartboard map of where that item is from.

3. Why did you purchase this item made in another country rather than one made in the United States?

4. Do you agree or disagree with this statement: Americans depend too much on other countries.

ProjectStudents plan a vacation with stops in five countries. While on the trip, you will purchase five items in each country. Start by setting a reasonable estimate of the cost of each item. Next, search for an internet site that will provide the exchange rates for the countries you plan to visit. The Universal Currency Converter or World Currency Exchange can help. Calculate the cost of the items in the currency of each of the countries you plan to visit.

Day 2 of Chapter 10

Global Competition

Global Competition Global competition often leads to trade

disputes between countries.

At the heart of most trade disputes is whether there should be limits on trade.

There are two opposing points of view: free trade and protectionism.

Protectionism Protectionism: practice of

putting limits on foreign trade to protect businesses at home.

Most countries sell what they produce at home so they often want to keep out foreign competitors.

Trade Barriers To limit competition from other

countries, governments put up trade barriers to keep foreign products out.

3 ways:Tariff: tax placed on imports to

increase their price in the domestic market

Quota: limit placed on the quantities of a product that can be imported.

Embargo: when the government decides to stop an import or export of a product.

Free Trade

Supporters of free trade believe there should be no limits on trade.

Trade Alliances To reduce limits on trade more countries are

forming trade alliances with each other.

Trade alliance: several countries merge their economies into one huge market. Examples: North American Free Trade Agreement (NAFTA) includes

the United States, Canada, and Mexico European Union (EU) includes Austria, Belgium,

Denmark, Finland, France, Germany, Great Britain, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and Sweden

Association of Southeast Asian Nations (ASEAN) includes Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, and Cambodia.

Project

Imports_Exports Project