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MARCH 16/17, 2015 Announcements:  Macro bodies project due 4/2/15  Vocab quiz: March 26/27  Content quiz: March 30/31 EQ  Explain why individuals,

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Presentation on theme: "MARCH 16/17, 2015 Announcements:  Macro bodies project due 4/2/15  Vocab quiz: March 26/27  Content quiz: March 30/31 EQ  Explain why individuals,"— Presentation transcript:

1 MARCH 16/17, 2015 Announcements:  Macro bodies project due 4/2/15  Vocab quiz: March 26/27  Content quiz: March 30/31 EQ  Explain why individuals, businesses, and governments trade goods and services. Standard SSEIN1 Warmups:  Why do you think we trade internationally?  Define import  Define export Agenda:  Notes  Discuss class schedule for rest of year  Assign unit 4 project

2 a)Explain the difference between balance of trade and balance of payments. SSEIN1 THE STUDENT WILL EXPLAIN WHY INDIVIDUALS, BUSINESSES, AND GOVERNMENTS TRADE GOODS AND SERVICES.

3  Trade is the voluntary exchange of goods and services.  When costs are greater than the benefits people stop trading  If I can import it cheaper than I make it I will trade with you. WHAT IS TRADE?

4  People and organizations in different countries often trade goods and services because they value the things they buy more than they sell  People only exchange goods and services when it benefits them OR marginal benefits outweigh marginal costs INTERNATIONAL TRADE

5  Export: Goods that a nation sells to other countries  Import: goods that a nation buys from other nations EXPORTS AND IMPORTS

6 Benefits 1. Increase in competition 2. Increases the variety of goods and services 3. Spreads knowledge and education 4. Spreads new technologies and production methods BENEFITS OF TRADE

7 BALANCE OF TRADE  Every country = accounting record of international transactions  Government keeps the records  People and firms do the trading

8 BALANCE OF TRADE  Balance of trade  We want to sell more than we buy  Exports = money coming in = credits (+)  Imports = money going out = debits (-)  Net Exports = exports – imports  + = surplus  - = trade deficit

9 CAPITAL/FINANCIAL ACCOUNTS  Money when we buy and sell capital internationally.  Someone in China buys U.S. bonds = credit = good (we get the $$)  Someone in U.S. buys Chinese bond = debit = bad (they get the $$)  Same thing for buying/selling businesses

10 BALANCE OF PAYMENTS  Must balance  Deficit in trade = have to have surplus capital/financial account  Surplus in trade have to have deficit in capital/financial accounts

11  Balance of Trade v Balance of Payments  Balance of Trade = actual trading of imports/exports  Balance of Payments = record of the actual trading MUST KNOW


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