GLOBALIZATION UNIT LESSON 1

GLOBAL ECONOMICS

OBJECTIVES

• Review economic systems.• Introduce key economic terms related to

globalization.

WARM UP & REVIEW

• What is economy?• Way in which we

manage resources to meet needs

• What are resources?• Human: time, $, skill• Country: natural

resources, capital, labor force and technology

• Limited resources = Scarcity

BASIC ECONOMIC SYSTEMS

• 3 Basic Questions?• What to produce?• How to produce?• For whom to produce?

• Basic Systems?• Traditional• Cultural needs,

subsistence• Market• Free choice, competition

• Command• Govt decides, controls

• MIXED

• Economics • Study of decision-

making & resource allocation.

THE LAW OF SUPPLY & DEMAND

• Supply• The amt of a certain good

or service producers are willing to supply when receiving a certain price

• Law of Supply: The higher the price, the higher the quantity produced

•

• Demand• How much (quantity) of

a product or service people are willing to buy at a certain price

• Law of Demand: The higher the price, the less demanded

WHAT’S THIS MEAN?

• Desire equilibrium: At the given price, suppliers sell all the goods they’ve produced & consumers get all the goods they’re demanding.

• Too much supply (surplus), not enough demand = prices drop

• Too much demand & not enough supply (deficit) = prices rise

• “Market fluctuations”

GLOBAL ECONOMY

• Goal is effective resource mgmt for most efficient production

• Weigh opportunity cost• Value of alternative

that must be forgone to pursue certain action

• Specialization & Comparative Advantage• Nation makes

certain products at lower cost (higher quality) than others

GLOBAL TRADE

• Make better product• Make cheaper product• If can’t make on own = import• Exchange rates = more for $ elsewhere• Sell to more = make more $• Ease of access to markets

GLOBALIZATION REVIEW

• What is globalization?• Growing integration of

the world’s economies and societies.

• Open country to free trade

• Open currency markets

• Privatize business

GLOBAL IMPACT

• As global economy becomes more interdependent• Dvpt depends on

wise use of globally scarce resources• Decisions in one

location affect all others

ACTIVITY

• Illustrated Global Economic Terms• Working in groups of 4. create illustrations for each of the

terms on your vocab page.

CLOSURE

• What factors drive global economic decision making?

• Resource Scarcity• Supply & Demand• Opportunity Cost• Comparative

Advantage

HOMEWORK

• Choices Reading – International Trade: Competition & Cooperation in a Globalized World

• Available in classroom