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Global Producers and Consumers We are all part of the global marketplace. The global marketplace exists anywhere business crosses national borders.
Global Producers and Consumers Countries can satisfy their citizens’ wants and needs by buying them in the global market.
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.
The Global Marketplace The global marketplace works much like a shopping mall or a supermarket.
The Global Marketplace The United States is rich in resources—human, natural, and production — but it still needs things from other countries.
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
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.
Specialization The kinds of resources available to a country often influence what it specializes in producing.
Specialization A country with little money or advanced technology but a large population might specialize in manual labor.
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.
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.
Currency The foreign exchange market is made up of banks where different currencies are exchanged.
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.
Exchange Rates How much the currency of a country is worth depends on how many other countries want to buy its products.
Prices A company follows the change in exchange rates to find the best prices for products.
Prices When the value of a country’s currency goes up compared to another country’s, it has a favorable exchange rate .
Prices When the value of a country’s currency goes down compared to another country’s, it has an unfavorable exchange rate .
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.
Balance of Trade Balance of trade is the difference in the value between how much a country imports and how much it exports.
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 .
Balance of Trade A country can have an unfavorable balance of trade with one country and a favorable balance with another.
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)
It promotes cultural understanding and cooperation between countries.
It helps all countries raise their standard of living.
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.
Trade Alliances NAFTA (North American Free Trade Agreement) was controversial because some workers would be displaced when trade barriers were lowered.
Trade Alliances Some of the major trade alliances in the world today are:
European Union (EU)
Association of Southeast Asian Nations (ASEAN)
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.
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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.
International Business and Finance Affects Everyone An understanding of international business helps you understand why goods and services are at particular prices.
International Business and Finance Affects Everyone The business leader of tomorrow will have a good grasp of international business and finance.