1. Lead off 5/7 What kinds of things could the government do to encourage people to buy things made in the US? Do you think the government should do things to encourage people to buy American products? Why or why not?

2. International Trade Issues Chapter 17-2,3

3. I. Barriers to Trade A.Tariffs 1.Revenue – small; in order for the government to make money 2.Protective – high in order to drive up import prices and decrease quantity demanded B.Quotas – limit to the number of imports in order to increase business for domestic companies C.Others 1.Inspection 2.Licensing

4. II. Arguments for Protectionism A.National Defense 1.PROTECTIONISM: Dependence makes a country weak so domestic industries tied to defense should be protected 2.FREE TRADE It might be worth it to have a strong economy Which industries are strategically important enough to protect? B.Infant Industry Protection 1.PROTECTIONISM: New companies should be protected from foreign competition until they are established 2.FREE TRADE: to politically difficult to remove those protections C.Protecting Domestic Jobs 1.PROTECTIONISM: imports cause loss of jobs to cheap foreign labor 2.FREE TRADE: protection causes higher prices and inefficiency D.Keeping Money at Home 1.PROTECTIONISM: imports cause loss of American dollars to foreign economies 2.FREE TRADE: that money can come back

5. III. Free Trade Movements A.Benefits of world Trade 1.Specialization 2.Variety of goods 3.competition B. Organizations WTO – world trade organization NAFTA – US, Mexico, and Canada EU – European Union

6. Lead off 5/8 How many different foreign currencies can you name? How would you pay for things if you went to another country?

7. IV. Foreign Exchange A.Trade Balance 1.Trade surplus – exports greater than imports 2.Trade deficit – imports greater than exports B.Exchange rate – the price of one country’s currency compared to another C.Effect of trade balance on exchange rate 1.Deficit will result in decrease in currency value 2.Decreased currency value will result in growth in imports (surplus) 3.Surplus will result in increase in currency value 4.Increased currency value will result in growth of imports (deficit)