The document is a chapter from a textbook that discusses global business and trade. It covers topics such as why countries trade, how currency exchange works, the advantages of free trade and protectionism, different types of trade barriers, and major trade alliances like the European Union and NAFTA. It emphasizes that international business and trade affects people worldwide and understanding these concepts is important for consumers, workers and business leaders.

1. pp. 146-159 Chapter 10 Business in a Global Economy

5. Why It’s Important Global trade doesn’t just influence business, it also affects all the countries and people of the world.

6. Key Words multinational company imports exports exchange rate balance of trade protectionism continued

7. Key Words tariff quota embargo free trade

8. Global Producers and Consumers We are all part of the global marketplace. The global marketplace exists anywhere business crosses national borders.

9. Global Producers and Consumers Countries can satisfy their citizens’ wants and needs by buying them in the global market.

10. The Global Marketplace A multinational corporation is a company that does business in many countries and has facilities and offices in many countries around the world.

11. The Global Marketplace The global marketplace works much like a shopping mall or a supermarket.

12. The Global Marketplace The United States is rich in resources—human, natural, and production — but it still needs things from other countries.

13. Figure 10.1 MAJOR EXPORTS AND IMPORTS OF THE UNITED STATES Look at the graph to see what products the United States imports and exports. Name the product that the United States exports more than it imports. Source: Standard & Poor’s

14. Specialization Countries specialize in producing certain goods and services. By specializing, countries can sell what they produce best so they can buy the products they need from other countries.

15. Specialization The kinds of resources available to a country often influence what it specializes in producing.

16. Specialization A country with little money or advanced technology but a large population might specialize in manual labor.

17. Types of Trade Imports are goods and services that one country buys from another country. Exports are goods and services that one country sells to another country.

19. Currency Countries have to pay for each other’s products with currency. Currency is another name for money. Just as countries use different lan-guages, they use different currencies, such as dollars, pesos, and yen.

20. Currency The foreign exchange market is made up of banks where different currencies are exchanged.

21. Exchange Rates The exchange rate is the price at which one currency can buy another currency. Exchange rates change from day to day and from country to country.

22. Exchange Rates How much the currency of a country is worth depends on how many other countries want to buy its products.

23. Prices A company follows the change in exchange rates to find the best prices for products.

24. Prices When the value of a country’s currency goes up compared to another country’s, it has a favorable exchange rate .

25. Prices When the value of a country’s currency goes down compared to another country’s, it has an unfavorable exchange rate .

26. Prices Some countries choose to lower the value of their currency to bring in more business. When this happens, it costs less to buy products from that country.

27. Balance of Trade Balance of trade is the difference in the value between how much a country imports and how much it exports.

28. Balance of Trade When a country exports more than it imports, it has a trade surplus . When a country imports more than it exports, it has a trade deficit .

29. Balance of Trade A country can have an unfavorable balance of trade with one country and a favorable balance with another.

30. Graphic Organizer How Exchange Rates Affect the Balance of Trade Graphic Organizer Weak Currency FAVORABLE BALANCE OF TRADE More exports than imports Strong Currency More imports than exports NEGATIVE BALANCE OF TRADE Trade surplus (leftover money) Trade deficit (debt)

32. Global Competition Global competition often leads to trade disputes between countries. At the heart of most trade disputes is whether there should be limits on trade.

33. Protectionism Protectionism is the practice of putting limits on foreign trade to protect businesses at home.

38. Trade Barriers To limit competition from other countries, governments put up trade barriers to keep foreign products out.

39. Trade Barriers A tariff is a tax placed on imports to increase their price in the domestic market.

40. Trade Barriers A quota is a limit placed on the quantities of a product that can be imported.

41. Trade Barriers An embargo is when the government decides to stop an import or export of a product.

42. Many Asian markets are friendlier to smaller American companies. Consultant Robert Azar works with U.S. businesses that want to plant roots in Asia. continued The Friendly Asian Markets

43. According to Azar, Asian businesses may perceive a large company as a threat. In contrast, they often see smaller ones as someone they can join up with. continued The Friendly Asian Markets

45. Free Trade Supporters of free trade believe there should be no limits on trade.

49. Trade Alliances To reduce limits on trade more countries are forming trade alliances with each other. In a trade alliance, several countries merge their economies into one huge market.

50. Trade Alliances NAFTA (North American Free Trade Agreement) was controversial because some workers would be displaced when trade barriers were lowered.

52. Figure 10.2 MAP OF TRADE ALLIANCES IN THE WORLD The European Union (EU) is the oldest and best-known economic community formed to promote free trade among the members of the community and to foster common economic policies.

54. International Business and Finance Affects Everyone Understanding international business and finance has become increasingly important for the consumer, wage earner, investor, citizen, and business leader.

55. International Business and Finance Affects Everyone An understanding of international business helps you understand why goods and services are at particular prices.

56. International Business and Finance Affects Everyone The business leader of tomorrow will have a good grasp of international business and finance.

58. As a restaurant owner, what kind of things might you import and export? Type your answer here Name

59. In the global marketplace, what is the importance of specialization? continued Name Type your answer here

60. By expanding operations domestically and internationally, how does this affect the economies involved? continued Name Type your answer here

61. How can a small company, like Panda Express, change domestic culture? Name Type your answer here