The document discusses international trade and exchange rates. It provides examples to illustrate the concepts of absolute advantage and comparative advantage in trade. Students are asked questions about why specialization and trade are beneficial even if one country or party can produce everything more efficiently. The document also discusses the impacts of a strong versus weak US dollar on trade balances, consumer prices, and the competitiveness of exports. Students are given practice problems involving currency exchange rates and calculating costs of goods in different currencies.

1. Good Day! DRAW A LINE SEPARATING TODAY & YESTERDAY 1) Write: Date: 04/26/10 , Topic: Exchange Rates 2) On the next line, write “ Opener #41 ” and then: 1) Plot your mood, reflect in 1 sent . 2) Respond to the opener by writing at least 2 sentences about : Your opinions/thoughts OR/AND Questions sparked by the clip OR/AND Summary of the clip OR/AND Other things going on in the news. Announcements: None Intro Music: Untitled

3. Agenda 1) Introduction to World Trade 2) China in the World Economy End Goal, you will be able to… 1) How does China impact the world economy? Reminder 1) No HW (Test on Monday)

4. Work #41a , Title “ Why Trade ” Ask your partner (include their name): 1) If a doctor needs eggs, why doesn’t a doctor raise his own chickens?

7. 2) TRADE: Doctor can buy his eggs (organic ones at that), he can now work more, how does that impact the rest of the economy?

8. TRADE: These jobs would never have existed if the doctor couldn’t trade.

9. 3) Imagine a Cupertino family of 3: mom (scientifically talented) dad (enjoys knitting), and daughter (musically talented). This family makes everything themselves. Being self sufficient keeps all 3 busy doing things needed for basic survival (food+shelter). Would the family be better off if it began to trade (buy items) instead of making them, EVEN if trade meant the father could not find a job making clothes, and remained jobless?

10. 4) If the city of Cupertino wants to protect its jobs, should the city pass a law requiring that all goods bought in Cupertino be made in Cupertino? 5) If the state of CA wants to protect its jobs, should the state pass a law requiring that all goods be bought in CA be made in CA? 6) Should the US require all goods bought in the US be made in the US?

11. If we want everyone to do what is most efficient, and we all benefit from doing what we are most efficient at, why not open this to the whole world?

13. Notes #41a , Title: “ Trade ” 1) Absolute Advantage : Produce everything better 2) Comparative Advantage : Worth trading, even if you do everything well, so you can focus on what you do best

14. Notes #41a , Title: “ Trade ” 1) Absolute Advantage : Produce everything better 2) Comparative Advantage : Worth trading, even if you do everything well, so you can focus on what you do best

15. Notes #41a , Title: “ Trade ” 3) Exchange Rate : How much of X money it takes to get Y money (supply + demand) 4) Strong Dollar : Other nations want more US $ (good for consumers, bad for US exports) 5) Weak Dollar : Other nations want less US $, others already have too many (bad for consumers, good for US exports) 6) Trade Deficit : More money going out than in

19. American wants a BMW (3e)

20. American exchanges $3 for 3e

21. American pays BMW 3e

22. American wants to buy 2 nd car, but Eur. has surplus US $, it wants more US $ for each euro.

23. America has a trade deficit, BUT Lets say as the US dollar gets weaker US buys less BMWs

24. With weaker US dollar, Europeans buys more Fords

25. Europe’s surplus of US dollars diminishes , which strengthens US dollar , which means US buys more BMW again.

26. America has a trade deficit, BUT Lets say by not making cars in theUS, It made planes

28. American wants a ZuZu Pet

29. American exchanges $3 for 15 yuan

30. American pays Zuzu Pet

31. China lends US money by buying US Bonds

32. China Buys US companies + property

34. Review 1) Weak Money : Takes less foreign money to buy $1 US dollar. (weak demand) 2) Strong Money : Takes a lot more foreign money to buy $1 US dollar. (strong demand)

35. Test Practice Lets say $1 US = 100 Japanese Yen $10,000 Ford Focus = 1,000,000 Y 1,000,000 Yen Honda Civic = $10,000 US Weaker Money : Money buy that takes less foreign money to buy $1 US dollar. $1 US=75 Y $10,000 Ford Focus = 750,000 Y (US supplier happy) 1mil Yen Honda Civic = $13,333 (US shopper sad) Stronger Money : Money that takes a lot more foreign money to buy $1 US dollar. $1 US=125 Y $10,000 Ford Focus = 1,250,000 Y (US suppliers sad) 1mil Yen Honda Civic = $8,000 (US shopper happy)

40. Work #41b , “ Exchange Debate ” 1) Read the 2 sides, choose 1 side, and write which you choose and explain why . 2) Then write down what your partner thinks ( include their name at the end ). 1 2 3 4 5 Weak Dollar 1) More expensive foreign goods and US tourist (harder for consumers) 2) Easier for US companies to sell overseas Strong Dollar 1) Cheaper foreign goods and cheaper for US tourists 2) Easier for foreign companies to sell in America

41. Work #41c , Title “ Euro Exchange ” $1 US Dollar used to trade for 1 Euro. NOW $1 US dollars trades for 0.74 Euros. 1) Is the US dollar weaker or stronger now? 2) Who benefits from this current exchange rate AND who suffers ?

42. Work #41c , Title “ Euro Exchange ” Takes 1.30 US dollars to buy 1 Euro 3) If you went to Ireland to buy an iPod Nano (135e), how much US dollars would it cost? Takes 0.74 Euros to buy 1 US dollar 4) If the Irish come to the USA to buy an iPod Nano ($135), how much Euros does it cost?

48. If the USA can find more productive things to do. Trade will make us richer.

49. If the USA can’t find more productive things, US will have to lower wages (lifestyle) until they are productive again.

50. Homework: 1) No Homework