Globalization and Interdependence. 1.) The Business Cycle Quiz ___________

Globalization and Globalization and InterdependenceInterdependence

1.) The Business 1.) The Business Cycle QuizCycle Quiz

___________

___________

___________ ___________

2.Which is NOT an economic indicator?2.Which is NOT an economic indicator?

a. GDPa. GDP b. Unemploymentb. Unemployment

c. PPIc. PPI d. Starving Populationd. Starving Population

3. The amount of final goods a country produces is known as 3. The amount of final goods a country produces is known as what?what?

a. GDP per capitaa. GDP per capita b. PPIb. PPI c. CPIc. CPI d. d. GDPGDP

4. Because prices of goods have continually gone ______, our 4. Because prices of goods have continually gone ______, our country is suffering from _________________.country is suffering from _________________.

a. up, inflationa. up, inflation b. down, inflationb. down, inflation c. up, deflationc. up, deflationd. down, deflationd. down, deflation

5. If there is a BULL market, which phase of the business 5. If there is a BULL market, which phase of the business cycle are we likely in?cycle are we likely in?

a. Expansiona. Expansion b. Contractionb. Contraction c. Troughc. Trough d. Boomd. Boom

____6. Which type of voting occurs when a person plans to vote ____6. Which type of voting occurs when a person plans to vote for every Democrat on the ballot?for every Democrat on the ballot?

A split ticketA split ticket b. A straight ticketb. A straight ticket c. A strong c. A strong ticketticket d. A short ticketd. A short ticket

____7. Which election allows voters to choose a candidate to ____7. Which election allows voters to choose a candidate to represent their party? represent their party?

closed election closed election b. general election b. general election c. open c. open election d. primary electionelection d. primary election

____8. In which type of primary election can members of either ____8. In which type of primary election can members of either party vote?party vote?

ClosedClosed b. Openb. Open c. Splitc. Split d. d. StraightStraight

____9. How are caucuses different from primary elections? ____9. How are caucuses different from primary elections? Caucuses are meetings of voters where discussions and support Caucuses are meetings of voters where discussions and support

for candidates can be debatedfor candidates can be debatedPrimaries can only be held after the general electionPrimaries can only be held after the general electionPrimaries are only used in large states where voters select Primaries are only used in large states where voters select

candidates at the same time. candidates at the same time. Caucuses do not have the power to designate a political Caucuses do not have the power to designate a political

candidate as a party's caucus winner.candidate as a party's caucus winner.____10. If no presidential candidate obtains a majority in the ____10. If no presidential candidate obtains a majority in the

Electoral College, how is the president chosen?Electoral College, how is the president chosen?The former president appoints the new presidentThe former president appoints the new presidentThe House of Representatives chooses the presidentThe House of Representatives chooses the presidentThe Senate chooses the presidentThe Senate chooses the presidentThe winner of the popular vote becomes presidentThe winner of the popular vote becomes president

GoalsGoals

Explain how people and businesses are Explain how people and businesses are interconnected by the world economy.interconnected by the world economy.

Explain the impact of interdependence on Explain the impact of interdependence on the world.the world.

Warm-UpWarm-Up Look at a tag on something you are Look at a tag on something you are wearing. Where did it come from?wearing. Where did it come from?

Where else do you think most of the items Where else do you think most of the items you own come from?you own come from?

Key TermsKey TermsGlobalization: political and economic Globalization: political and economic connections and communication.connections and communication. ImpactImpact: Nations depend on one another for : Nations depend on one another for goods. You have sneakers from China and a goods. You have sneakers from China and a shirt from Vietnam.shirt from Vietnam.

Interdependence: Countries are dependent on Interdependence: Countries are dependent on one another for goods/services/resources. one another for goods/services/resources. They focus on producing what they are best They focus on producing what they are best at, and export it to other countries.at, and export it to other countries. ImpactImpact: America produces financial services but is : America produces financial services but is

dependent on China for TVs, Clothes, Shoes, MP3s.dependent on China for TVs, Clothes, Shoes, MP3s. Dependence means you rely on someone or something Dependence means you rely on someone or something

elseelse

We’ll set up good banks for you if you give us TVs!

OK! Deal.

What is the US What is the US Dependent on?Dependent on?

More Key TermsMore Key Terms

Favorable Balance of TradeFavorable Balance of Trade: Export more : Export more than you import.than you import. Why do you want to export more than you import?Why do you want to export more than you import?

ImpactImpact: Because America imports more goods : Because America imports more goods from China than we export to China we have an from China than we export to China we have an UNFAVORABLE balance of trade with China.UNFAVORABLE balance of trade with China.

Favorable or Favorable or Unfavorable?Unfavorable?

Look at the table, how would you describe Look at the table, how would you describe the US trade with Japan in 2009?the US trade with Japan in 2009?

Exports Imports Balance

12,653,400,000

21,676,700,000

-9,114,300,00

Favorable or Favorable or Unfavorable?Unfavorable?

Look at the table, how would you describe Look at the table, how would you describe the US trade with Japan in 2009? ****the US trade with Japan in 2009? ****

Exports Imports Balance

12,653,400,000

21,676,700,000

-9,114,300,00

More Key TermsMore Key Terms Comparative Advantage: A country should Comparative Advantage: A country should specializespecialize in producing the goods and in producing the goods and services it is best at producing, and services it is best at producing, and trade for other goods/services.trade for other goods/services. ImpactImpact: Germany produces cars because it is : Germany produces cars because it is

better at producing cars than computers. It better at producing cars than computers. It has a comparative advantage in car production has a comparative advantage in car production and imports computers from Japan.and imports computers from Japan.

We USED to have a We USED to have a comparative advantage comparative advantage

when it came to when it came to producing cars….. What producing cars….. What

happened?happened?

Protection or trade Protection or trade barriers?barriers?

Subsidies: Gov’t money given to producers, Subsidies: Gov’t money given to producers, to reduce the cost of production.to reduce the cost of production. Impact: increases production (supply), decreases Impact: increases production (supply), decreases

price so that other countries want to buy the price so that other countries want to buy the products.products.

Example: US rice farmers get a subsidy, rice Example: US rice farmers get a subsidy, rice production goes up, price of rice goes down, production goes up, price of rice goes down, Kenya and France now buy rice from the US.Kenya and France now buy rice from the US.

Subsidies have been used a lot to encourage Subsidies have been used a lot to encourage farmers to grow corn as an alternative fuel farmers to grow corn as an alternative fuel sourcesource

Protection or trade Protection or trade barriers?barriers?

Tariffs: Taxes on imported goodsTariffs: Taxes on imported goods Impact: tariffs make consumers buy cheaper Impact: tariffs make consumers buy cheaper domestic goods over more expensive foreign domestic goods over more expensive foreign products. Helps out our own industries.products. Helps out our own industries.

Example: in the 1980s all Japanese cars Example: in the 1980s all Japanese cars had tariffs, so people bought more American had tariffs, so people bought more American carscars

Do Tariffs make countries more or less Do Tariffs make countries more or less likely to want to trade? Why?likely to want to trade? Why?

Protections or Trade Protections or Trade Barriers?Barriers?

Quotas: A limit on the amount of Quotas: A limit on the amount of goods you can import from a goods you can import from a certain country.certain country. Impact: protects domestic industry Impact: protects domestic industry from cheap foreign goods.from cheap foreign goods.

Ex: The US can only import 621,780 kg Ex: The US can only import 621,780 kg of cotton from Chinaof cotton from China

What is the impactWhat is the impactof this on trade?of this on trade?

Protections or Trade Protections or Trade Barriers?Barriers?

Embargoes: When the gov’t makes Embargoes: When the gov’t makes it illegal to trade with another it illegal to trade with another nation.nation. Impact: Hurts the nation that cannot Impact: Hurts the nation that cannot receive goods, often the people who receive goods, often the people who live there suffer.live there suffer.

Example: US will not trade with Cuba Example: US will not trade with Cuba b/c it is communistb/c it is communist

US Embargo on CubaUS Embargo on Cuba

U.S. Trade Embargo against Cuba. It is U.S. Trade Embargo against Cuba. It is illegal to trade with companies in Cuba, illegal to trade with companies in Cuba, we disagree with the communist ruler Fidel we disagree with the communist ruler Fidel Castro and his government. We are hurting Castro and his government. We are hurting Cuba economically by not trading and Cuba economically by not trading and raising the living standards of the raising the living standards of the country.country.

Regulation VS. Regulation VS. DeregulationDeregulation

Regulation: gov’t puts limits or rules on Regulation: gov’t puts limits or rules on business.business.

Deregulation: gov’t REMOVES limits/rules Deregulation: gov’t REMOVES limits/rules on business (better for free trade)on business (better for free trade)

So, what are embargos, tariffs, and quotas So, what are embargos, tariffs, and quotas all examples of?all examples of?

International Free Trade International Free Trade OrganizationsOrganizations

There are also world-wide There are also world-wide organizations that exist to reduce organizations that exist to reduce the barriers to trade.the barriers to trade.

NAFTANAFTA

North American Free Trade AgreementNorth American Free Trade Agreement

NAFTA impacts the USA because its goal is NAFTA impacts the USA because its goal is to eliminate all tariffs and trade to eliminate all tariffs and trade barriers between Canada, the USA and barriers between Canada, the USA and Mexico by the end of 2009.Mexico by the end of 2009.

EUEU

European UnionEuropean Union

27 European countries are members. 27 European countries are members.

Ensures the free flow of capital, people, Ensures the free flow of capital, people, goods & services. goods & services.

No Tariffs between member countriesNo Tariffs between member countries

All have a common currency (Euro)All have a common currency (Euro)

EU FlagEU Flag

WTOWTO

World Trade OrganizationWorld Trade Organization

To be part of the WTO you have to agree to To be part of the WTO you have to agree to reduce tariffs & eliminate quotas. reduce tariffs & eliminate quotas.

WTO: Members nations in WTO: Members nations in dark bluedark blue

OUR WORLD TRADE GAMEOUR WORLD TRADE GAME

There are 8 different colors of paper. You are There are 8 different colors of paper. You are trying to get 1 of each piece in your possession. trying to get 1 of each piece in your possession. In order to do so, you much trade one piece for In order to do so, you much trade one piece for one piece with other people. There will be four one piece with other people. There will be four rounds of trading.rounds of trading.

You WIN the game when you have 8 You WIN the game when you have 8

pieces of paper that are of all 8 colorspieces of paper that are of all 8 colors

PINKPINK, , GREENGREEN, , PURPLEPURPLE, WHITE, , WHITE, BLUEBLUE, , YELLOW, YELLOW, BLACKBLACK, , ORANGEORANGE

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGEROUND 1: You can ONLY trade with the person ROUND 1: You can ONLY trade with the person Mr. Egan says you can, and you can ONLY Mr. Egan says you can, and you can ONLY trade one color.trade one color.

ROUND 2: You can ONLY trade with the person ROUND 2: You can ONLY trade with the person Mr. Egan says you can, but you can now Mr. Egan says you can, but you can now trade ANY color.trade ANY color.

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGE

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGE

ROUND 3: You can trade with anyone at your ROUND 3: You can trade with anyone at your TABLE, but you can only trade ONE colorTABLE, but you can only trade ONE color

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGE

ROUND 4: You can trade with anyone at your ROUND 4: You can trade with anyone at your TABLE, but now you can trade any colorTABLE, but now you can trade any color

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGE

ROUND 5: You can trade with anyone in the ROUND 5: You can trade with anyone in the ROOM, but you can only trade one color.ROOM, but you can only trade one color.

PINKPINK, , GREENGREEN, , PURPLEPURPLE, , WHITE, WHITE, BLUEBLUE, , YELLOW, YELLOW,

BLACKBLACK, , ORANGEORANGE

ROUND 6: You can trade ANYTHING with ANYONEROUND 6: You can trade ANYTHING with ANYONE

1.1. How is a tariff best described?How is a tariff best described?a.a. A tax on importsA tax on imports

b.b. Contributing to a favorable balance of Contributing to a favorable balance of tradetrade

c.c. Comparative advantageComparative advantage

d.d. A violation of human rightsA violation of human rights

2.2. What does the principle of comparative What does the principle of comparative advantage govern?advantage govern?

a.a. Developed countriesDeveloped countries

b.b. Multinational corporationsMultinational corporations

c.c. The United NationsThe United Nations

d.d. International TradeInternational Trade

3. Which organization/ country would matter 3. Which organization/ country would matter most when it came to helping out free most when it came to helping out free trade?trade?

a.a. The United NationsThe United Nations

b.b. The United StatesThe United States

c.c. NAFTANAFTA

d.d. CanadaCanada

4. Which of the following is NOT an example 4. Which of the following is NOT an example of a trade barrier?of a trade barrier?

a.a. TariffTariff

b.b. QuotaQuota

c.c. Comparative AdvantageComparative Advantage

d.d. EmbargoEmbargo

5. How do American Consumers benefit from 5. How do American Consumers benefit from international trade?international trade?

a.a. They have access to goods that are scarce They have access to goods that are scarce in this countryin this country

b.b. They have a trade surplus that increases They have a trade surplus that increases savingssavings

c.c. They have lower opportunity costsThey have lower opportunity costsd.d. They have an absolute advantage in They have an absolute advantage in

producing some goodsproducing some goods

6. Why might Japan impose high tariffs on 6. Why might Japan impose high tariffs on America automobiles imported into Japan?America automobiles imported into Japan?

a.a. To increase US sales of Japanese carsTo increase US sales of Japanese carsb.b. To encourage American auto makers to make To encourage American auto makers to make

better carsbetter carsc.c. To increase imports of American carsTo increase imports of American carsd.d. To limit competition in Japan from To limit competition in Japan from

American carsAmerican cars