2. I. Costs and Benefits of International
Trade
A. Trade between countries rarely
involves directly swapping one
resource for another.
1. Some countries may have many
resources while others have relatively
few.
A. Trade allows the people of a country to
enjoy goods they might not otherwise
have.
1. The U.S. imports; coffee, bananas, sugar,
copper, and rubber.
3. C. Interdependence- It is unlikely that any
single nation has all the resources it
wants, so each one depends on other
to supply its needs and wants.
D. Because different countries have
different resources, the key to this type
of trade is specialization.
1. Specialization is when countries
specialize in selling goods they can
produce quickly, easily, or in large
quantities.
i. Saudi Arabia-Oil
ii. Sell the oil for money.
iii. The money is spent on the countries needs,
such as food.
4. I. OPEC (Organization of Petroleum
Exporting Countries)-10 country
members control most of the world’s
supply. They set production quotas low
to keep demand high.
II. Tariffs and trade
A. Tariff- is a tax placed on goods that
are imported into a country.
1. The policy of using tariffs and other barriers to
foreign trade is known as protectionism.
2. One of the ways governments protect their
homelands’ industries.
5. B. During the early years of the U.S.,
tariffs had two purposes; protect
industries and to raise money.
1. Intended to make foreign goods more
expensive than the same goods produced
in the U.S.
C. Protectionism gradually gave way to
freer trade; most countries still protect
at least a few of their industries from
some foreign competition.
1. The U.S. has retaliated against Japanese
tariffs on American rice by putting tariffs
on certain Japanese products sold in the
U.S.
6. III.The Global Market
A. Global economy is the movement toward
freer international trade.
1. Falling trade barriers between countries make
the globalization of the economy much easier.
2. Globalization encourages more trade and freer
trade.
A. In the global economy, business can pick
and choose from a worldwide menu of raw
materials, labor forces, and markets.
1. Businesses do it because they can get the best
prices for the supplies they need by shopping in
the global marketplace.
7. C. One criticism of the global economy is
that capital—the money that makes the
global economy run—is concentrated
in the U.S., Western Europe, and
Japan.
1. The labor force, meanwhile, is
increasingly found in the poorer countries
of South America, Asia, and Africa.
i. Companies shop for labor in these areas
because it’s less expensive.
ii. Large supply of workers = lower price of
labor.
8. IV.The Labor Market
A. Countries often must reshape their
trading policies to reflect global
conditions, and the global
economy changes the nature of
labor markets as well.
1. Countries struggle with the problem
of excess workers.
i. Globalization and technology mean
that many industries need fewer
workers.
9. 2. Countries such as the U.S., which has
traditionally paid its manufacturing
workers high wages, is seeing
manufacturing jobs to other areas in
which companies can get the same work
done with less expensive labor.
A. The global economy presents workers,
consumers, businesses, and
governments with challenges unlike
any faced in human history.
10. 1. Many multinational corporations have
bigger “economies” than many countries,
what roles are governments supposed to
play?
i. Can they still protect their citizens, their
industries, and their environments?
2. Free trade is a benefit to businesses and
consumers in many ways, what will
become of the people who lose their jobs
and their purchasing power because of it?
3. World leaders of the 21st century must
deal with these issues and others that
have yet to appear.
