Directions:
Fill in the blanks.

1. Domestic Trade vs. World Trade
• Domestic trade
– is within one _____________ or country
– is supported when you buy a product which says “Made in the
U.S.A.”
• World trade
– is between different _____________or countries
– is supported when you buy a product which says “Made in China”

2. World Trade
• Has many advantages including:
– expands market
– creates and _____________competition
– increases availability of natural resources
• Also has disadvantages including:
– must work to _____________cultural and
communication/language barriers
– eliminates local companies due to foreign competition

3. Exports
• Are goods produced in one country then shipped to another region or
country
• Were about $1,579 billion in the United States in 2013
• Leading U.S. _____________partners include:
– _____________
– European Union
– Mexico
– China
Fun Fact: The United States was the second-biggest merchandise trader in
2013.







4. Imports
• Are foreign goods shipped into a region or country
• Were about $2,329 _____________in the United States in 2013
• Leading U.S. _____________partners include:
– China
– European Union
– Canada
– Mexico

5. Balance of Trade
• Is a country’s total amount of exports _____________its total amount
of imports
• Is favorable when
– exports are higher than imports, creating a trade _____________
• Is unfavorable when
– imports are higher than exports, creating a trade deficit
total exports- total imports = balance of trade

6. Balance of Trade
• Approximate U.S. _____________in 2013: $1,579 billion
• Approximate U.S. imports in 2013: $2,329 billion
• $1,579 billion - $2,329 billion = -$750billion
• U.S. _____________of trade in 2013 was approximately -$750 billion,
or a trade deficit of $750 billion

7. Balance of Payments
• Is a comparison of amount of foreign currency taken into a country
versus amount of _____________currency paid out
• Is favorable when
– a country takes in more than it pays out
• Is unfavorable when
– a country _____________out more than it takes in
foreign currency – domestic currency = balance of payments

8. Balance of Payments
• Is created by money movement from one country to another through
the following:
– imports and exports
– foreign _____________
– _____________or foreign aid
– tourism


9. Foreign Exchange Rate
• Is the rate at which one currency may be converted into another
• Is used daily when world trade occurs
• Can be _____________on the Internet or using special software
• Can affect a transaction’s value if _____________occurs during the
transaction

10. World Trade Organization
• Established in 1995
• Is an international organization _____________world trade
• Ensures world trade occurs in a _____________and free-flowing
manner with little disruption
• Has a website: http://www.wto.org

11. Government Regulation of Trade
• Occurs in these three ways:
– quotas
– tariffs
– _____________

12. Quotas
• Are a fixed limit on the amount of import or export of a product set
when trading with another country
• Are established to:
– maintain prices
– _____________new and existing businesses from excessive
competition
– demonstrate _____________of another country’s trade policies

13. Tariffs
• Are a special _____________placed on foreign goods sold in the
United States
• Are used to achieve one of two effects:
– lower prices and increase imports
• reduce tariffs
– raise prices and _____________imports
• increase tariffs






14. Embargo
• Is a method used to stop the _____________of certain products to or
from a particular country for economic or _____________reasons
• Are established to:
– demonstrate disapproval of another country’s trade policies
– protect new and existing businesses from excessive competition

15. Economic Integration
• Is an agreement among countries to _____________trade barriers
– countries within the same _____________which coordinate their
policies to mirror each other

16. Economic Integration
• Has a main objective of increasing _____________
– increasing trade between states within the same economic union
will increase the _____________which leads to better welfare
GDP: gross domestic product is the measure of all the good produced
within a period (quarterly or yearly)

17. Economic Integration
• Has five levels:
– free trade
– custom union
– common _____________
– economic union (single market)
– _____________union

18. Free Trade
• Is an agreement which __________or greatly reduces tariffs on trade
– for example, the North American Free Trade Agreement (NAFTA)
• Has a goal to promote economic _____________

19. Custom Union
• Creates unified tariffs on external borders
• Is a type of trade _____________with a free trade area
– for example, _____________Customs Union (EACU)
Trade Bloc: provides defense for a group of countries within a region
against tariffs and other trade barriers





20. Common Market
• Allows for free movement of goods and services across countries
• Sets common external _____________among member countries
– for example, East African _____________Market

21. Economic Union
• Consists of:
– no barriers for international trade
– free movement of labor
– _____________tax rates
– similar monetary and _____________policies
• Encourages political integration
– for example, European Union’s Common Agriculture Policy

22. Political Union
• Involves a common government
• Is found within _____________states
– no state has more power than the other
– there is a _____________government
– for example, European Union (EU)

23. Controversial Issues on Economic Integration
• Include:
– creation of trade blocs
– _____________of trade
– formation of national _____________
– inflation of prices

24. European Community (EC)
• Was a regional organization of countries wanting to accomplish the
following:
– political _____________
– _____________partnership
• Was established in 1957 by the Treaty of Rome









25. European Community (EC)
• Original members included __________Western European nations:
– Belgium
– _____________
– France
– Italy
– Netherlands
– West Germany
• Is also referred to as the European Economic Community (EEC)

26. European Community (EC)
• Allowed Britain, Ireland and Denmark to join in 1973
• Admitted three Southern European _____________when they agreed
to implement democratic governments
– Greece (1981)
– Spain and _____________ (1986)

27. European Community (EC)
• Is part of the three ________which make up the European Union (EU)
1. European Community
2. Common Foreign and Security Policy (CFSP)
3. Justice and Home Affairs (JHA)
• Became the _____________Union in 1993

28. European Union (EU)
• Is made up _____________countries based off the European
Community
• Countries include:
– Hungary
– _____________
– Poland
For a full list of the countries in the European Union, visit europa.eu

29. European Union (EU)
• Was founded in 1993
• _____________on the ideas of the European Community by including
more countries
• Makes member countries _____________on each other to assist in
keeping peace




30. European Union (EU)
• Main goal is to _____________human rights
• Values include:
– human dignity
– freedom
– democracy
– _____________
– rule of law
– respect for human rights
The European Union developed a single European currency, the euro (€).

31. Foreign Aid
• Is assistance given to a country in need, in terms of _____________,
goods or services
• Includes:
– _____________emergency
• designed to help when disasters hit
– military assistance
– development aid

32. Foreign Aid
• Pros include:
– helps developing nations
– _____________suffering
– supports _____________peace

33. Foreign Aid
• Cons include:
– allows nations to be dependent on others
– may force _____________on dependent countries
– makes providing countries accept additional _____________

34. Foreign Aid
• Can create bonds between nations
• Can be a strategy to _____________expansion of relationships and
trading between countries
– countries who have a _____________agreement with each other
obtain an increase in foreign aid





35. U.S. Foreign Aid
• Involves the United States providing _____________to over 100
countries, including:
– Israel
– Kenya
– _____________

36. U.S. Foreign Aid
• Accounts for less than _____________percent of the total federal
budget
– in 2015, the federal _____________was $3.8 trillion
• Has provided over $321 billion in assistance since World War II