1. Taxes Debrief! 1. What type of tax system did your group decide on and WHY did you make this decision? 2. Did your group give a tax credit for children? Why/why not? 3. Did your group decide to tax capital gains? Why/why not? 4. What was the most difficult part of deciding on a tax structure for your country?

2. International Trade

6. I. Absolute and Comparative Advantage A. Absolute Advantage: This occurs when a country can produce an item quicker than another country. Canada United States Hat8 hrs.10 hrs. Pair of shoes4 hrs.2 hrs. Who has absolute advantage in hat production? CANADA!!!!!!!!! Who has absolute advantage in shoe production? USA!!!!!!!!!!

7. B. Comparative Advantage: this occurs when one country can produce an item with a lower opportunity cost than another country. Canada United States Hat8 hrs.10 hrs. Pair of shoes4 hrs.2 hrs. What is the opportunity cost of producing a Hat in Canada? In the U.S.? What is the opportunity cost of producing a pair of shoes in Canada? In the U.S.? Who has comparative advantage in Hat production? Who has comparative advantage in Shoe production?

8. C. Two countries should trade when: 1. They each have comparative advantage in producing an item. AND 2. They would save time by trading.

9. Happytown Evilville Smiles1 hr.6 hrs. Nuclear Bombs2 hrs.3 hrs.

10. Canada United States Hats8 hrs.10 hrs. Shoes4 hrs.2 hrs.

11. II. Barriers to trade A. Tariffs: taxes on imports. 1. Protective Tariff: raises prices of foreign goods in order to protect domestic industries 2. Protectionist Policies: Economic policies put in place by governments to protect products/industries within the country

12. B. Quotas: A limit on the # of goods that can enter a country. C. Preservation of Standards: When one country holds another to certain standards (environmental, labor, etc.) as a condition of trade. Many people who oppose free trade believe that we need to have “fair trade” and uphold certain standards in trade agreements.

13. D. Export Subsidy: payments by a government to an industry, enabling them to sell their products abroad at a cheaper price than at home. (Agriculture – produce too much…what can you do?)

14. III. Arguments For Free Trade A. In theory, everybody wins with trade— countries wouldn’t agree to trade if it didn’t benefit them. B. Free trade means lower prices for consumers. C. Free trade has potential to create jobs.

15. IV.Arguments against Free Trade A. Dependency Theory: A critique of Free Trade 1. Smaller, poorer countries become dependent upon trade with richer, larger nations in trade agreements