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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?

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

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Page 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

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?

Page 2: 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

International Trade Issues

Chapter 17-2,3

Page 3: 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

I. Barriers to Trade

A. Tariffs1. Revenue – small; in order for the government to make

money2. 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. Others1. Inspection2. Licensing

Page 4: 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

II. Arguments for Protectionism

A. National Defense1. PROTECTIONISM: Dependence makes a country weak so domestic

industries tied to defense should be protected2. FREE TRADE

• It might be worth it to have a strong economy• Which industries are strategically important enough to protect?

B. Infant Industry Protection1. PROTECTIONISM: New companies should be protected from foreign

competition until they are established2. FREE TRADE: to politically difficult to remove those protections

C. Protecting Domestic Jobs1. PROTECTIONISM: imports cause loss of jobs to cheap foreign labor2. FREE TRADE: protection causes higher prices and inefficiency

D. Keeping Money at Home1. PROTECTIONISM: imports cause loss of American dollars to foreign

economies2. FREE TRADE: that money can come back

Page 5: 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

III. Free Trade Movements

A. Benefits of world Trade1. Specialization2. Variety of goods3. competition

B. Organizations • WTO – world trade organization• NAFTA – US, Mexico, and Canada• EU – European Union

Page 6: 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

Lead off 5/8

• How many different foreign currencies can you name?

• How would you pay for things if you went to another country?

Page 7: 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

IV. Foreign Exchange

A. Trade Balance1. Trade surplus – exports greater than imports2. 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 rate1. Deficit will result in decrease in currency value2. Decreased currency value will result in growth in imports

(surplus)3. Surplus will result in increase in currency value4. Increased currency value will result in growth of imports (deficit)