In one hour: Ash can catch 4 Pikachu or 3 Zubat Misty can catch 4 Pikachu or 2 Zubat

1. In one hour: Ash can catch 4 Pikachu or 3 Zubat Misty can catch 4 Pikachu or 2 Zubat • Who has absolute advantage in Pikachu? • Who has absolute advantage in Zubat? • Who should specialize in Pikachus? The one with the lowest opportunity cost! In this case, it’s Misty

2. What is it called when a country uses quotas and tariffs to protect domestic industries? • If the US imports $420 billion dollars of goods and exports $385 billion dollars of goods, does it have a positive trade balance or a negative trade balance? • What do we mean by “Standard of Living”? • Anna Rosling videoSee how the rest of the world lives organized by income Protectionism

3. Is a negative trade balance bad? Is a strong dollar good for the economy?

4. Exchange Rates and Trade Deficits

5. GDP = C + I + G + Xn (Ex – Im) • The United States has a negative trade balance • exports $180.4 billion minus the imports $226.8 billion

6. The United States’ Balance of Trade • Come up with a list of the top five countries we import goods from…..

7. Top 5 Countries We Import From:

9. The Balance of Trade • Come up with a list of the top five countries we export to….

10. Top 5 Countries We Export to:

11. Why Do We Trade So Much with Canada and Mexico? • North American Free Trade Agreement, NAFTA • Eliminated trade barriers between US, Canada, and Mexico • Increased the overall value of intra-North American trade by threefold since the agreement's inception in 1994

12. Is a negative trade balance bad? Crash course in economics #15 10 min

13. What is the Foreign Currency Exchange Rate? • The foreign currency exchange rate is the price of one country’s currency in terms of another country’s currency

14. What Determines Exchange Rates? • Most countries now use floating exchange rates • The exchange rates for a country’s currency varies according to supply and demand • Countries can manipulate the value of their currency by selling or buying it on the foreign exchange market

15. Sooo, one US dollar = ? Japanese Yen

16. Exchange Rates are the costs of buying another country’s money • When Sears imports Samsung TVs made in South Korea it pays for them using wons • May 9, 2017 the exchange rate was • $1 = 1136.09 South Korean Won • 1.00 SKW = .000880 USD

17. Depreciation • Depreciation is a decrease in the value of one currency relative to other currencies • A currency has depreciated if it buys less of another currency • Weak dollar means the US dollar buys only a relatively small amount of foreign currency • If you take a trip to Spain, you must buy some euros with US dollars • On 5/26/16  the exchange rate was $1 = ₡0.89364, or  ₡1 =  $1.11902 

18. Appreciation • Appreciation is an increase in the value of one currency relative to another currency • A currency has appreciated if it buys more of another currency and it becomes cheaperto buy foreign-made goods • Strong dollar means it buys a relatively large amount of foreign currency

19. Depreciation Vs. Appreciation

20. Appreciation is good for Travelers • At the end of 2015, • $1 US dollar bought 117 Japanese yen • At the beginning of 2016, • $1 US dollar bought 121.05 Japanese yen • If you traveled to Japan in January of 2016 instead of December 2015, goods would’ve been 3.5% cheaper to you!

21. A Strong dollar is good, right? It depends • Marketplace story on tourism and strong dollar

22. How’s the US Dollar Against the Euro Now? • In 1999, the Euro was created with a $1 = ₡1 exchange rate • On Nov. 1, 2012 the exchange rate was 1 US dollar = 0.77 euros • On Jan. 8, 2016 the exchange rate was 1 US dollar = 0.92 euros • On Jan. 11, 2018 the exchange rate was 1 US dollar = 0.84 euros

24. What actions did China take to ensure their currency was undervalued?

26. Exchange Rates:What’s Better a Strong or Weak Dollar? SHOUT OUT! Or Plickers

27. Given the following situations, tell me if you would prefer the U.S. dollar to appreciate or depreciate relative to the Euro. Let’s pretend it is at a $1 = 1 Euro exchange rate

28. US dollar to appreciate (strong) or depreciate (weak) against Euro? Your U.S. factory buys parts imported from Germany.

29. Appreciate! $1 = 1.2 Euro More Euros per dollar means you can buy more of their parts per dollar

30. Appreciate or Depreciate? Your New York sight-seeing business relies on European travelers.

31. Depreciate! $1 = .8 Euro So 1 Euro buys $1.20 dollars and Europeans want to come because our stuff looks cheap!

32. Appreciate or Depreciate? You love to buy Belgium chocolates!

33. Appreciate! $1 = 1.2 Euro More Euros per dollar means you can buy more Belgium chocolates per dollar

34. Appreciate or Depreciate? You and your friends are a planning a graduation trip to the Netherlands.

35. Appreciate! $1 = 1.2 Euro More Euros per dollar means more fun!

36. Appreciate or Depreciate? As Tillamook Cheese CEO, your chief competitors are French cheeses companies.

37. Depreciate! $1 = .8 Euro It will now take $1.20 dollars to buy 1 Euro, so French cheese is more expensive to American consumers