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Lesson 4 free trade - power point - duke-1

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Economics, Free Trade

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Lesson 4 free trade - power point - duke-1

  1. 1. Free Trade
  2. 2. Free Trade: International trade left to its natural course without tariffs, quotas, or other restrictions.
  3. 3. Three Rules to Free Trade 1. Trade must be voluntary. 2. All trading parties must benefit. 3. Trade moves products from people who value them less, to people who value them more.
  4. 4. Why Do We Trade? There are 6 reasons… 1. Natural Resources – Materials found in nature that is used to make a good or service. 2. Human Capital – Knowledge of making the good/ providing the service. 3. Physical Capital – Objects used to produce the good or service.
  5. 5. Why Do We Trade? There are 6 reasons… 4. Economic Activity Patterns – Producing, exchanging, consuming, saving, & investing. 5. Unequal Distribution of Resources – Knowledge of making the good/ providing the service. 6. Need for Trade – Objects used to produce the good or service.
  6. 6. Clear your desks please…..some things to consider….. 1. Trade moves goods from people who value them less to people who value them more. 2. Trade allows us to specialize in the things we do best. 3. Trade lowers per-unit costs by using mass production methods and lower labor costs.
  7. 7. Trading Simulation Rules Goals/Rules 1. Improve your economic situation creating more wealth for your country. 2. Trade must be voluntary. 3. You can trade all or any portion of your bag.
  8. 8. Let the Trading Begin… After each round, you will rate your overall satisfaction level with what you have in your bag. Round 1: you will be trading with your row only.
  9. 9. Round # 1 My satisfaction level after round # 1 is ___________. 1. The U.S. has a trade deficit resulting in a negative trade balance (Japan and China). 2. The U.S. is the largest importer. China is the largest exporter in the world.
  10. 10. Trading Partners European Union - EU is largest single trading partner with the United States. 25 Member Nations -
  11. 11. Round # 2 My satisfaction level after round # 2 is ___________. Protectionism: Use of trade barriers to protect U.S. goods from foreign competition. Trade Barriers: (restrictions) limit free trade.
  12. 12. Round # 3 My satisfaction level after round # 3 is ___________. 1995 World Trade Organization (WTO) was established to negotiate new trade agreements, resolve trade disputes, and enforce trading rules.
  13. 13. What’s Wrong With Free Trade? What’s Great About Free Trade?
  14. 14. How Free Trade Helps Less Developed Countries How Free Trade Hurts Less Developed Countries How Free Trade Helps the United States How Free Trade Hurts the United States
  15. 15. How Free Trade Helps Less Developed Countries How Free Trade Hurts Less Developed Countries • Provides jobs for unskilled workers • Raises the standard of living • Increased social equality • Increases the flow of goods to their country • Specialization = no subsistence farming • Efficient use of their scarce resources • Higher rates of income inequality • Poor working conditions • Higher rates of corruption • Increased environmental degradation
  16. 16. How Free Trade Helps the United States How Free Trade Hurts the United States • Provides cheap goods which increase one’s income • Increases the flow of goods to and from the country • Efficient use of their scarce resources (Specialization) • Creates competition • Creates dependency on other nations • Ships jobs abroad • Provokes the use of protectionism which can lead to trade wars • Increased environmental degradation
  17. 17. Quick-Write Does free trade benefit the poor?

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