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Understanding NAFTA and Global Trade Concepts: Key Terms and Advantages

This review covers essential trade concepts including NAFTA, tariffs, and quotas, and explores the role of major international organizations like the WTO, IMF, and World Bank. Learn about the importance of comparative and absolute advantages in production, interdependence, and specialization, alongside the intended and unintended effects of NAFTA. Discover how trade agreements influence the movement of goods, services, and capital between nations, and the impact of organizations focused on economic growth and poverty reduction.

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Understanding NAFTA and Global Trade Concepts: Key Terms and Advantages

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Presentation Transcript

  1. Unit 4 Review • What does NAFTA stand for ? • Name the three countries in NAFTA – US, Canada, Mexico • The purpose of NAFTA is to ….. Increase free trade in N.America 4. What is a tariff? –tax on imported goods 5. What is a quota? – a set limit on the number of imports allowed in

  2. 6. What is the organization intended to ensure free movement of people, goods, and capital between member nations in Europe? European Union 7. IMF stands for what? 8. This organization’s main focus is on the elimination of poverty. World Bank

  3. This organization was set up as a forum for nations to discuss and negotiate trade agreements. It created a system of trade rules. WTO • OPEC stands for ? • Most member nations of OPEC are from this geographic region.-Middle East

  4. Multiple Choice • 12. When regions and nations use comparative advantage to produce at the lowest cost and then trade with others,…………… will increase. A. Interdependence B. Production C. Consumption D. Standard of Living E. All of the Above

  5. 13. Trade is ……. ? good 14. occurs when a country (or person) can produce more of a good given the same resources (inputs) –absolute adv. 15.when a country (or person) can produce the same amount with less resources (inputs) –abs. adv.

  6. Larry can produce 2 clay vases in 1 hour • Linda can produce 1 clay vase in 1 hour • Larry can produce 4 meals in 1 hour • Linda can produce 1 meal in 1 hour 16. Who has the absolute advantage for making vases? Larry 17. Who has the absolute advantage for making meals? Larry

  7. 18. Occurs when a person or nation can produce goods or services at a lower opportunity cost than other individuals or nations. – comp. adv.

  8. Larry can produce 2 clay vases • Linda can produce 1 clay vase • Larry can produce 4 meals • Linda can produce 1 meal • 19. Linda’s opportunity cost of 1 vase = 1 meal • 20. Larry’s opportunity cost of 1 meal = ½ vase

  9. Other key ideas : Specialization Intended and Unintended effects of NAFTA Arguments for and against free trade

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