Economics for Leaders
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Economics for Leaders
Economics for Leaders
Lesson 10:International Markets
Economics for Leaders
People
Do !
Countries don’t trade
Economics for Leaders
Voluntary Trade Creates Wealth -
ALWAYS
Local trade
Regional trade
National trade
International trade
Economics for Leaders
Balance of Payments
Capital account
Current
Account
Goods &
ServicesFinancial
flows
Economics for Leaders
Please use the slides before this one in your presentation.
The slides following this one are provided as options.
Economics for Leaders
Fundamentally the same decision
Economics for Leaders
ERP-5: Understanding based on knowledge and evidence imparts
value to opinions.Opinions matter and are of equal value at the ballot box. But on matters of rational deliberation the value of an opinion is determined by the knowledge and evidence on which it is based. Statements of opinion should initiate the quest for economic understanding, not end it.
Economic Reasoning Principle #5: Understanding based on knowledge and evidence imparts value to opinions.
Economics for Leaders
Opening Markets Is Creating Wealth
Economics for Leaders
Who should produce what?
The Law of Comparative Advantage– Through specialization and exchange, both
parties can gain from lower costs and greater output – even if one party does both things better.
What is your lowest opportunity cost
alternative?
Economics for Leaders
Comparative AdvantageProducing a Meal
Cooking
Cleaning
Barbie Ken
10 min
20 min
40 min
30 min
Totals 30 min 70 min
Economics for Leaders
Opportunity Costs
Cooking
Cleaning
Barbie Ken
1/2 cleaning
2/1 cooking
4/3 cleaning
3/4 cooking
Economics for Leaders
What Will Ken & Barbie Do?
Working Independently– Barbie Produces a Meal in 30 Minutes– Ken Produces a Meal in 70 Minutes
Barbie Has An Absolute AdvantageWould Barbie Produce Two Meals?With Trade/Cooperation– Barbie Spends 20 Minutes Cooking– Ken Spends 60 Minutes Cleaning– They Both Gain!
Economics for Leaders
RememberNations Are Not Different
Goods are Produced at Least Cost When People Specialize According to the Principle of Comparative AdvantageLesson - Don’t Try to Do Everything; It is Not EfficientTrade Between Countries Creates WealthExamples– Ken and Barbie Have Time for Other Activities
Economics for Leaders
Zeke and ZacWho Should:
•Drive the truck ?
•Load the garbage?
What if – Zac doesn’t have a drivers license?
Economics for Leaders
Banana size regulations
Economics for Leaders
Mexican Truck Now Allowed on US Highways
Economics for Leaders
Economics for Leaders
NAFTA
Economics for Leaders
Economics for Leaders
WTO (formerly GATT)
Economics for Leaders
European Monetary Union
Economics for Leaders
Trade Balance
ImportsExports
Economics for Leaders
Pierre Sells (Exports) Bread . . . Then What?
Economics for Leaders
What Can Pierre Do with $$US?
Take his Cheri to his favorite bistro at the Eiffel Tower?
Mais NON!
Buy U.S goods & services
OR
U.S. assets ?
Oui! Oui!
Economics for Leaders
Economics for Leaders
Economics for Leaders
Economics for Leaders
Economics for Leaders
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