What do we know?
IB Economics-International Trade Review
What terms do we associate with international trade?
Understand the main advantages and disadvantages of international trade. Explain the different types of protectionism and their impacts. Recognize the consequences of exchange rate fluctuations and international monetary systems.
International Trade Revision
Absolute Advantage: The ability of a country to produce a good or service more efficiently than another country. Comparative Advantage: The ability of a country to produce a good or service at a lower opportunity cost than another country. Trade Restrictions: Government policies that limit or regulate the flow of goods and services between countries.
The USD/JPY currency pair is the most traded currency pair in the world, accounting for about 20% of all currency trades. The Mexican Peso is the 8th most traded currency in the world. The British Pound Sterling is the oldest currency still in use today, having been in existence for over 1,200 years.
Did you know?
The World Trade Organization (WTO) uses a tariff system, which is based on the Harmonized System (HS), to classify goods and track global trade. Over 150 countries are members of the WTO and are subject to the rules and regulations it sets. The first international trade agreement was signed in 1947 by 23 countries and was called the General Agreement on Tariffs and Trade (GATT).
Did you know?
What are the potential benefits of a currency appreciation in an economy?
What policies can a government implement to maximize the benefits of an appreciation in an economy?
What do you think are the potential risks of an appreciation in an economy?
How can governments mitigate the potential risks of an appreciation in an economy?
Work together in pairs: What are two advantages and two disadvantages of international trade for a country?
Brain break: Draw a banana that is a superhero fighting a group of evil broccoli villains.
What is the difference between absolute and comparative advantage?
- Absolute advantage refers to a country's ability to produce a good more efficiently than another country, while comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than another country.
- Absolute advantage refers to the ability of one company or individual to produce more of a particular good or service than its competitors, while comparative advantage is the ability of one company or individual to produce goods and services at lower opportunity costs than its competitors.
- Absolute advantage refers only to international trade, while comparative advantage applies only in domestic markets.
What are some trade barriers that countries use?
What is dumping in relation with international trade?
- When companies sell their products below cost on foreign markets with an aim of driving out local competition.
- When companies sell their products above average market prices on foreign markets with an aim of maximizing profits.
- When companies refuse selling products on certain foreign markets because they consider them unprofitable.