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International Economics

International Economics. Lesson 4: Balance of Trade & Balance of Payments. In Your Groups. Answer (in written form) the following questions: How do American producers like to be paid? How do French producers like to be paid? Do American producers generally accept Euros as payment?

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International Economics

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  1. International Economics Lesson 4: Balance of Trade & Balance of Payments

  2. In Your Groups • Answer (in written form) the following questions: • How do American producers like to be paid? • How do French producers like to be paid? • Do American producers generally accept Euros as payment? • Do French producers want to sell their products (like wine and cheese) to people in other countries? • What does the word “imports” mean? • What does the word “exports” mean?

  3. One More Question When U.S. consumers buy French goods, what do the French do with our dollars?

  4. Trade Balance With France (Link)

  5. Balance of Trade Exports Minus Imports

  6. More Vocabulary Trade Surplus: When Exports > Imports Trade Deficit: When Imports > Exports

  7. Foreigners with US dollars will use those dollars to buy American goods or invest in American companies.

  8. Balance of Payments Dollars entering the country minus dollars leaving the country.

  9. The balance of payments is always zero.

  10. Thriftville vs. Squanderville A Class Activity In A Land With No Banks

  11. Exports:_______ Imports:_______ BOT:_______ Stock sold to foreigners ($ amount):_______ Foreign stock purchased ($ amount):_______ BOP:_______ Exports:_______ Imports:_______ BOT:_______ Stock sold to foreigners ($ amount):_______ Foreign stock purchased ($ amount):_______ BOP:_______ Thriftville vs. Squanderville

  12. Take Note • Squanderville ran a trade deficit because they imported more than they exported, and their balance of trade was negative. • Thriftville ran a trade surplus because they exported more than they imported, and their balance of trade was positive. • Thriftville consumers assumed ownership of larger portions of Squanderville’s businesses. • Thriftville is in a better long-run position, as their investments will provide them with additional income.

  13. If the USA exports $3 billion worth of goods/services, and imports $4 billion worth of goods/services, what is our balance of trade? • A) -$1 billion • B) $0 • C) $1 billion • D) $3 billion

  14. If the USA exports $3 billion worth of goods/services, and imports $4 billion worth of goods/services, then the USA is running a • A) trade surplus • B) trade deficit

  15. In 1998, what was the dollar value of goods and services purchased from China by Americans? • A) $14 billion B) $71 billion • C) $85 billion D) $57 billion

  16. Which of the following statements is incorrect? • A) The U.S. ran a trade deficit with Japan of $64 billion. • B) The U.S. balance of trade with Japan was -$64 billion. • C) The U.S. ran a trade surplus with the United Kingdom of $4 billion. • D) The U.S. balance of payments with France was -$6 billion.

  17. With which country was the U.S. running the biggest trade deficit? • A) Canada • B) Japan • C) China • D) United Kingdom

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