Chapter 10 Business in a Global Economy

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Chapter 10

Business in aGlobal Economy

Section 10.1

The Global Marketplace

Read to Learn

Explain why the world has become a global

economy.

Explain why people and countries specialize in

producing goods and services.

The Main Idea

International trade has increased because more

countries specialize and offer their goods and

services to other countries. Also, the value of one

nation’s currency in relation to other currencies

affects what it buys and sells to other nations.

Key Concepts

The Global Economy

International Trade

Key Term

global

economy

international

trade

the interconnected economies of the

nations of the world

the exchange of goods and

services between nations

Key Term

multinational

corporation

trade

a company that does business in

many countries and has facilities

and offices around the world

a specific area of business or

industry, a skilled occupation, or

the people who work in a specific

area of business or industry

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Key Term

imports

exports

goods and services that one country

buys from another country

goods and services that one country

sells to another country

Key Term

balance of

trade

comparative

advantage

the difference in value between a

country’s imports and exports over

a period of time

the ability of a country or company

to produce a particular good more

efficiently than another country or

company

Key Term

exchange

rate

the price at which one currency can

buy another currency

The Global Economy

We live in a global

economy fueled by

international trade.

The development of

the global economy is

called globalization.

global economythe interconnected economies of the nations of the world

international tradethe exchange of goods and services between nations

The Global Economy

Sony is an example

of a multinational

corporation.

multinational corporationa company that does business in many countries and has facilities and offices around the world

International Trade

Trade allows

countries to meet

their individual wants

and needs as well as

to help their own

economies.

tradea specific area of business or industry, a skilled occupation, or the people who work in a specific area of business or industry

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Multinationals

The top multinational companies include Sony, Coca-Cola, Toyota, and Nike.

Figure 10.1Major Imports and Exports of the United States

Managing and Leading Others

Leaders know their business.

Leaders know the capabilities of their

employees.

Leaders can analyze current trends.

Leaders have vision and can inspire others.

Leaders help a company run smoothly.

Managing and Leading Others

Some people who are managers are not

leaders.

They may focus on specific tasks to make sure

work gets done, but they may not be

visionaries or inspire others.

Quiet Leadership

On December 1, 1955, Rosa Parks, an African American seamstress, was ordered to

give her bus seat to a white male passenger in Montgomery Alabama. Her refusal and subsequent arrest sparked the civil rights

movement.

Types of Trade

Domestic trade is the production, purchase,

and sale of goods and services within a

country.

World trade is the exchange of goods and

services across international boundaries.

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Imports and Exports

One country’s

imports are another

countries exports.

importsgoods and services that one country buys from another country

exportsgoods and services that one country sells to another country

Balance of Trade

The United States

has a favorable

balance of trade

with Australia.

balance of tradethe difference in value between a country’s imports and exports over a period of time

Graphic Organizer

Trade Surplus

A country exports more that

it imports

Trade Deficit

A country imports more that

it exports

Specialization

To specialize means to focus on a particular

activity, area, or product.

Specialization builds and sustains a market

economy.

Using Resources to Specialize

Countries can specialize and trade some of the

items that they produce in order to obtain other

countries’ goods and services.

Using Resources to Specialize

Countries that

specialize may have

a comparative

advantage.

comparative advantagethe ability of a country or company to produce a particular good more effectively than another country or company

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Currency

To trade with another country, businesses

must convert their money into that nation’s

currency.

Currency is exchanged on the foreign

exchange market.

World Currencies

Several countries have the same currencies or use the same currencies.

Currency

The exchange rate

for currencies

changes from day to

day and from country

to country.

exchange ratethe price at which one currency can buy another currency

Currency

Companies follow the exchange rates to find

the best prices for products.

A country with an appreciated exchange rate

can buy more of another country’s products.

1. What is the global economy?

The global economy is the interconnected economies of the nations of the world.

2. What is the difference between domestic trade and international trade?

Domestic trade is between parties within a country. International trade is between parties in different countries.

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3. Why would a country want its currency to appreciate?

A country might want its currency to appreciate so that citizens can buy more goods and services in other countries.

Chapter 10

Business in aGlobal Economy

Section 10.1

The Global Marketplace

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