1. International Trade Ch. 4 Section 4.1

2. International Trade Exchange of goods and services amongst nations. Imports – purchases from other countries Exports – goods and services sold to other countries How would your life be different if countries did not exchange products?

3. Most countries DO NOT produce or manufacture all of the goods and services they need. Each country possesses unique resources and capabilities.

4. Absolute Advantage A country has an absolute advantage when they have economic resources that allow it to produce a product at a lower unit cost than any other country. EXAMPLE: Brazil - Coffee

5. Comparative Advantage Some countries have a comparative advantage in more than one product and they have to which ones to produce and which ones to import. This is done after they compare the unit cost of each product. https://www.youtube.com/watch?v=rznDegemqGg

6. Government Involvement All nations control and monitor their trade with businesses in other countries. Nations must keep track of their international trade to be aware of their economic status. Trade Surplus: nation exports more than it imports Trade Deficit: nation imports more than it exports. (Referred to as balance of trade)

7. The U.S. Trade Deficit. Why? Rd. page 87 Negative Consequences of this: DEBT (more money is leaving the country then coming in).

8. Trade Barriers A nation’s government may impose a trade barrier if they want to limit trade. Many nations favor and practice – free trade (no regulations)

9. 3 Types of Trade Barriers Tariffs – tax on imports Quotas – limits either the quantity or the monetary value of a product that may bee imported Embargoes – total ban on specific goods coming into and leaving the country (can be done for health reasons)

10. Protectionism http://www.investopedia.com/terms/p/protectionism. asp

11. Agreements and Alliances Governments make agreements with one another to establish guidelines for International Trade. World Trade Organization (WTO): global coalition of nations that make the rules governing international trade. North American Free Trade Agreement: international trade agreement among the U.S, Canada, and Mexico. To abolish all trade barriers and investment restriction 2009.

12. European Union (EU): Europe’s trading bloc. Established in 1992. Created a single currency and established free trade among its members.

13. Individual Work Pg. 91 Review of Key Concepts Homework – Pg. 91 – Question 4 (1 pg. typed in MLA format)