IE - International Economics Overview

International Economics

Individuals, businesses, and governments trade goods and services in a global economy. International relationships in an interdependent global economy are constantly changing. Calculating comparative advantage helps nations decide what to produce and what to import. Trade can be free or hindered by trade barriers. Money is also traded within the global market. The exchange rate regulates the value of our currency when we use it for travel or trade with foreign countries. Our state of Georgia even has a role in this global economy, and that role is expanding!

Lesson Objectives

In this module, students should be able to:

  1. Explain how nations benefit when they specialize in producing goods and services in which they have a comparative advantage.
  2. Explain how trade barriers create costs and benefits to consumers and producers.
  3. Analyze Georgia’s role in the international economy.
  4. Analyze how changes in exchange rates can have an impact in the United States and other countries.

Key Terms

The following key terms will help you understand the content in this module.

  • Absolute advantage - the ability to produce more of a given product using a given amount of resources
  • Comparative advantage - the ability to produce a product most efficiently given all other products that could be produced
  • Multinational corporation - an international corporation whose business activities are spread among at least two countries
  • Trade barrier - any regulation or policy that restricts international trade, especially tariffs, quotas, etc
  • Tariff - a tax on an imported good
  • Quota -a limit on the amount of a good that can be imported or allowed into the country
  • Embargo - an official ban on trade or other commercial activity with a particular country
  • Exchange rate - the price of one nation’s currency in terms of another nation’s currency

IMAGES CREATED BY GAVS OR FOUND IN THE PUBLIC DOMAIN