Transcript Trade Barriers

Natural Resources & Trade
Impact on Country’s Economy
What is TRADE?
 The
voluntary exchange of goods
and services among people and
countries.
The Production Process
+
+
Natural Resources
Human Resources
=
Capital Resources
Goods and Services
Specialization

Specialization – countries or people skilled at producing
specific goods or services.
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EXAMPLE: The U.S. depends on Japan for VCRs and
televisions, on Brazil for coffee, and on the Middle East
for oil.
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The countries, in turn, depend on the U.S. for various
products
Free Trade vs. Trade Barriers
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Nations can trade freely with each other or
there are trade barriers.
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Free Trade: Nothing hinders or gets in the way
of two nations trading with each other.
Sometimes countries complain about trade.
They say that too much trade causes
workers to lose jobs. Therefore, countries
sometimes try to limit trade by creating trade
barriers.
Economic Trade Barriers

The most common types of trade barriers are
tariffs and quotas.
A tariff is a tax on imports (imports are goods
purchased from other countries and exports are
goods sold to other countries).
 A quota is a specific limit placed on the number
of imports that may enter a country.
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Another type of trade barrier is an embargo.
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a complete trade block for a political purpose
Benefits of Trade Barriers

Most barriers to trade are designed to prevent
imports from entering a country.
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Trade barriers provide many benefits
because they
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protect homeland industries from competition.
protect jobs.
help provide extra income for the government.
increase the number of goods people can choose from.
decrease the costs of these goods through increased
competition.
Gross Domestic Product
(GDP) Measuring Country’s Income

GDP measures the market value (country’s income) of the
final goods and services produced in an economy in a year.

GDP measures both income and output.
Income - everyone’s earnings in the economy
Output - total expenses on goods and services