GLOBAL ECONOMYSydney Marshall Block 3

Balance of Trade: the difference between a country’s total exports and total imports.

-This is important for a country because it shows the country if they had a trade surplus or a trade deficit.

Exchange Rate

• Exchange rate: the value of a currency in one country compared with the value of another. Supply and demand may affect this value of currency.

• The U.S exchange with Mexico is = • The U.S exchange with Russia is = • The U.S exchange with Japan is=

FACTORS!

• Three factors that can affect the exchange rate are:

Balance of Payments: when a country has a favorable balance of payments, the currency usually stays constant or rises.

Economic Conditions: when prices increase and the buying power of the money declines, its currency will not be appealing.

Political Stability: companies and individuals want a stable government.

GEOGRAPHY

• The location, climate, terrain, seaports, and natural resources of a country influence business activity. Very hot weather will limit the types of crops that can be grown.

• Countries with few natural resources must depend on imports.

CULTURE

• Cultural influences are important when doing business internationally because people must know the correct ways to do business in certain areas.

• For Example: Sometimes it is appropriate to hug in a business greeting. While other times, all that is appropriate is a handshake.

BALANCE OF TRADE

• The U.S. balance of trade with: Australia:+11,874.4

India: - 709.4

China:-266

Europe: -107