Calendar11+-+International+Economics

Section 3 International Economics

Table of Content:
 * 3.1 International Trade (one HL topic)
 * 3.2 Exchange Rate (Some HL extension)
 * 3.3 The Balance of Payments (some HL topics)
 * 3.4 Economic Integration (one HL extension)
 * 3.5 Terms of Trade (HL only)

3.1 Free Trade and Protectionism

__**September 5/ day 1**__ Reasons for trade and the theory of comparative advantage (Syllabus Section 4.1)


 * __Homework Due__


 * 1) __Extract focused on macroeconomics (Section 2 of syllabus)__: Bring a hard copy of the extract that you plan to use for your second commentary to class.
 * 2) Read Chapter 3 (Mankiw) and Section 4.1 (McGee) and watch the following videos on this topic.
 * [|Comparative Advantage Video]


 * __Assessments and A____ctivities__: Lecture on the reasons for trade and the theory of comparative advantage (PDF below)
 * [[file:1 - Comparative Advantage.pdf]]

media type="youtube" key="vc324aHB2m8" height="315" width="560"
 * __Related Readings__
 * __[|International Trade]__
 * [|Comparative Advantage]

__**September 7/ day 2**__ Benefits of free trade (Syllabus Section 4.2)


 * __Homework Due__: Read Mankiw (Chapter 9) and McGee (Section 4.2).


 * __Assessments and Activities__: Free-response/problem and lecture


 * __ //Free-response/problem// __ : You will work cooperatively with your partner to construct a response to the following prompt.


 * England and Scotland both produce scones and sweaters. Suppose that an English worker can produce 50 scones per hour or 1 sweater per hour. Suppose that a Scottish worker can produce 40 scones per hour or 2 sweaters per hour.


 * 1) Which country has the absolute advantage in the production of each good? Which country has the comparative advantage?
 * 2) If England and Scotland decide to trade, which commodity will Scotland trade to England? Explain.
 * 3) If a Scottish worker could produce only 1 sweater per hour, would Scotland gain from trade? Would England still gain from trade?


 * __//Lecture//__: The benefits of free trade (PDF below)


 * [[file:2 - Benefits of Free Trade.pdf]]


 * __Related Readings__
 * [|Free Trade]
 * __[|International Trade]__
 * [|"In Praise of Cheap Labor"]
 * [|"The Case for Sweatshops"]
 * [|"No Case for Sweatshops"]

__**September 11**__ **:** Gains from Trade and Protectionism (Syllabus Section 4.2)

>>
 * __Homework Due__: Read Chapter 9 (Mankiw) and watch these videos. NZ article
 * [[file:3- Protectionism.pdf]]
 * [|Video on protectionism]
 * [|The effects of a tariff]
 * [|The effects of a quota]
 * [|The effects of a protectionist subsidy]


 * __Assessments and Activities__:

>>> >> now do the following activity
 * __ //Free-response/problem// __
 * listen to the following audio file http://www.npr.org/templates/story/story.php?storyId=112804892
 * [[file:tarrif_usa_article.pdf]]
 * now watch the follwing video to help analyse the impact of tarrif.
 * http://www.youtube.com/watch?feature=player_embedded&v=S_pvEupKScc
 * 1) Find a product or commodity that your country imports from abroad. Using a demand and supply diagram, illustrate the impact that free trade for this good has on your country’s economy. Discuss all stakeholders, including: domestic producers and consumers, the domestic labor force, foreign producers and foreign workers.
 * 2) Next assume your country’s government wishes to limit the amount of imports of the product, and imposes a tariff that cuts the number of imports in half (this can be shown on your graph). Illustrate on the same graph the impact of the tariff on the stakeholders you identified above.
 * 3) Discuss the impact of protectionism on allocative efficiency ( When the level of output that society demands is produced by the firms in a market. If the marginal benefit enjoyed by consumers equals the marginal cost faced by producers, allocative efficiency is achieved. Only inperfect competition will allocative efficiency be achieved in the long-run, since the price of the good equals the marginal cost of the producers. In imperfectly competitive markets, the price will always be higher than the marginal cost of the firms, indicating that resources are under-allocated towards the product.) in the domestic and in the global economy.
 * 4) Under what circumstances might a protectionist tariff be economically justifiable?


 * __//Lecture//__: Protectionism (PDF below)


 * __Related Readings__
 * __[|Economic Sanctions]__


 * September 13:** Protectionism continued... Quotas, Protective subsidies


 * __Homework Due__: Read pages 408 to 416 of McGee


 * __Assessments and Activities__: Free-response/problem and lecture- PDF 3.1
 * practice question
 * [[file:subsidy_effect_question.docx]]


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * 1) Define each of the following terms: tariff and quota.
 * 2) Use diagrams to explain how tariffs and quotas are inefficient.


 * __//Lecture//__: Quota, subsidy and it's effect on the steak-holders


 * __Related Readings__
 * [|International Trade Agreements]
 * __[|European Union]__
 * [|"Eurozone: It Seemed Like a Good Idea at the Time"]
 * [|Monetary Union]

__**September 17:**__ Calculating the effect of protectionist policies. Arguments for and against protectionism


 * __Homework Due__: page 437 Short answers: Q 1-7 & data response Q 2 and 3 (do not answer questions on Balance of Payments)


 * practice question
 * [[file:subsidy_effect_question.docx]]


 * **__Lecture:__**
 * Arguments for and Against Protectionism
 * The links below go to videos in which the issues of free trade and protectionism are debated. Watch the videos, then consider the discussion questions at the bottom of the slide.
 * •[|Make Trade Fair - by][|Oxfam:]
 * •[|Joseph][|Stiglitz][| on][|globalization:]
 * •[|Columbian][|FTA, why it's good for][|America]
 * •[|Kenyans want trade not][|aid]
 * •[|Lou Dobbs on the dangers of][|trade]
 * •[|More Lou Dobbs with guest David][|Sirota]
 * •[|Ambassador to Columbia on the Benefits of Free][|Trade]
 * •[|Obama vs. McCain on Free Trade - 3rd][|Debate]
 * Discuss the following questions after watching each video:
 * 1.What views on trade are expressed in the video?
 * 2.Are there biases expressed by the people in the video? If so, what are they?
 * 3.Evaluate the arguments for or against free trade made in the video.
 * PDF 3.1 Arguments against protectionism
 * PDF 3.1 Arguments against protectionism
 * PDF 3.1 Arguments against protectionism

__**September 19:**__ Economic integration and the WTO (Syllabus Section 3 and 3)

>
 * __Homework Due__: Read Chapter 9 (Mankiw) and McGee section on economic integration.
 * read the attached ppt. lecture [[file:economic integration_ibECON.pptx]]
 * __//Lecture//__: Economic integration and the WTO (PDF below)
 * [[file:Free Trade Organizations.pdf]]


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * Define: Free trade area, customs union, common market and monetary union.
 * Explain the concepts of trade creation and trade diversion.

quiz: > this quiz will include everything you have learned thus far including your homework questions
 * Sub-section quiz review (3.1)
 * please come and see to get a copy of the past papers

__Related Readings__
 * [|International Trade Agreements]
 * __[|European Union]__
 * [|"Eurozone: It Seemed Like a Good Idea at the Time"]
 * [|Monetary Union]



__**September 23:**__


 * You will have your Sub-section quiz (3.1)
 * please come and see to get a copy of the past papers

__**September 25:**__ Exchange Rates (Syllabus Section 3.2)


 * __Homework Due__:
 * [[file:Exchange Rates.pdf]] read attached
 * Read Chapter 31 in Mankiw (The Prices For International Transactions: Real and Nominal Exchange Rates section) and watch the following videos.
 * media type="youtube" key="b_Fm8sW_g98" height="315" width="560"
 * [|Intro to Foreign Exchange Markets (Determinants of Exchange Rates)]


 * __Assessments and Activities__: Free-response/problem and lecture


 * __//Lecture//__: Exchange Rates (PDF below)

__Homework:__
 * __read the attached document and answer the following question:__
 * __what is PPP? explain using an example (other than beer)__
 * [[file:Purchasing Power Parity .docx]]


 * __Related Readings__
 * __[|Foreign Exchange]__


 * __September 27:__** Exchange rate continued

>> watch the video lesson, and respond to the discussion questions that follow. click here >> answer the attached questions: >> ** Questions: ** >> >> >>
 * HWK due: revise your notes on the previous lesson and PPP question
 * Lecture
 * 3.2 PDF
 * Data response question
 * Listen to the podcast [|click here]
 * 1) 1. Why does the Chinese Central Bank possess over $3 trillion of foreign exchange reserves?
 * 2) 2. What does the Chinese Central Bank do with the vast majority of the money it earns from the sale of its e xport that it does NOT spend on US goods? Why not keep this money in cash?
 * 3) 3. Why does the Chinese Central Bank manage the value of its currency, the RMB? Why not let the exchange rate be determined by the free market?
 * 4) 4. As the RMB is slowly strengthened against the dollar, who are the winners and losers? What impact should a stronger RMB have on the balance of trade between China and the US?

__**October 1:**__


 * **H**WK: the 4 questions on exchange rate from the previous class

Lecture: Exchange rate continued- Calculating exchange rate using Linear ER equation

Classwork/HWK

Watch the following video and answer the following questions:

http://www.youtube.com/watch?feature=player_embedded&v=b_Fm8sW_g98

** Questions: **
 * 1) Exchange rates are like prices, in that they are determined by supply and demand. But not all exchange rates are allowed to float freely, since the governments or central banks of some countries actively intervene in the market for their currency to manipulate its value. Identify one policy a government or central bank could use to strengthen the value of its currency and one policy that could weaken the value of a currency.
 * 2) What are the benefits of having a stronger currency?
 * 3) What are the benefits of having a weaker currency?
 * 4) Which determinant of exchange rates presented in the video do you think are most attributable to the fluctuating values of currencies on foreign exchange markets, and why? Relative incomes, relative interest rates, relative inflation rates, speculation or simply the tastes and preferences of global consumers?


 * __October 3__** **:** Balance of Payments (Syllabus Section 3.3)

>>
 * __Homework Due__: Read Chapter 31 in Mankiw (The International Flows of Goods and Capital section) and watch this video.
 * watch
 * http://www.econedlink.org/interactives/EconEdLink-interactive-tool-player.php?iid=222
 * read attached notes
 * [[file:4-5-international-economics-balance-of-payments.pdf]]
 * [[file:3.3 Balance of Payments.pdf]]


 * __Activities__:

>>>
 * Listen to the following podcast on China's accumulation of USD [|Podcast]
 * watch the following video and answer the following questions Balance of Payment video
 * #### Why does the Chinese Central Bank possess over $3 trillion of foreign exchange reserves?
 * 1) What does the Chinese Central Bank do with the vast majority of the money it earns from the sale of its [|exports] that it does NOT spend on US [|goods] ? Why not keep this money in cash?
 * 2) Why does the Chinese Central Bank manage the value of its currency, the RMB? Why not let the [|exchange rate] be determined by the free [|market] ?
 * 3) As the RMB is slowly strengthened against the dollar, who are the winners and losers? What impact should a stronger RMB have on the balance of trade between China and the US?

__Homework:__ >>
 * Define: Net exports and net capital outflow. Explain why they must be equal.
 * Explain how saving, investment and net capital outflow are related.
 * Explain how saving, investment and net capital outflow are related.


 * __//Lecture//__: Balance of Payments


 * __Related Readings__
 * __[|International Capital Flows]__


 * __October 7:__ Section 3.2 Exchange rate quiz review **

media type="youtube" key="IuNUrYgUqNI" height="315" width="560"
 * Watch this video for your revision


 * __ October 9: __ Section 3.2 Exchange rate quiz **


 * **Exchange Rate practice quiz**
 * Read attached to understand expansionary/contractionary policies and its effect on the ER.
 * [[file:contractionary_fiscal policy_exchange rate.docx]]
 * [[file:Fiscal policy and exchange rate.pdf]]
 * [[file:Fiscal policy and exchange rate.pdf]]

__**October 11:**__


 * Quiz answers**

__**October 15:**__ Balance of Payment Problems (Syllabus Section 3.3) with will be completing section 3.3 - Higher Level - MLC - The J-curve


 * __Homework Due__: Review attached
 * [[file:The J-CURVE-HL.pptx]]
 * [[file:Balance of Payments Problems.pdf]]
 * [[file:ML_J_Curve_HL-review.pdf]]
 * [[file:The Economic Effects of Devaluation.docx]]
 * Watch the following videos:
 * media type="custom" key="21118896"
 * media type="custom" key="21118904"
 * [|And this one] (Defining and explaining the Marshall-Lerner Condition)
 * [|And one more] (Explaining the J-Curve in conjunction with the Marsall-Lerner Condition)


 * //__Homework for next week: (after holidays)__//


 * __Assume that the government of Japan decides to use a loose monetary policy in order to remedy a recession__.


 * 1) Use diagrams to explain the effect of this policy on the interest rate, level of investment, real GDP and the price level.
 * 2) Explain how the change in the interest rate will affect the international value of the Yen and Japan's trade balance.
 * 3) Explain how the change in price level will affect the international value of the Yen and Japan's trade balance.
 * 4) Explain how the change in real GDP will affect Japan's trade balance and the international value of the Yen.
 * 5) Now assume that Japan embarks on an expansionary fiscal policy, running a budget deficit. Explain how this might result in a trade deficit.


 * __//Lecture//__: Balance of Payments Problems (PDF below)
 * [[file:The J-CURVE-HL.pptx]]
 * [[file:j-cur_exam questions.docx]]
 * [[file:j-cur_exam questions-answers.docx]]


 * __Related Readings__
 * __[|Foreign Aid]__
 * [|International Capital Flows]



__**October 17**__**:** Terms of Trade (Syllabus Section 3.5) HL
 * __Homework Due__: Watch the following videos and come to class prepared to ask any questions you have
 * [|Watch this video] (Defining terms of trade and explaining it in Production Possibilities)

>>
 * __Assessments and Activities__: Review activity:
 * http://www.reffonomics.com/TRB/chapter1/ppcurve3.swf
 * http://www.youtube.com/watch?v=iOkMKfgHw6A


 * Homework:
 * [[file:TERMS_of_TRADE_FINAL_monday[1][1].pdf]]


 * __//Lecture//__: Terms of Trade
 * [[file:Terms of Trade.pdf]]
 * [[file:4-5-international-economics-balance-of-payments.pdf]]

__**October 21 :**__ Internal Assessment (Commentary #2)

media type="custom" key="21190334"
 * __ Homework Due __ : questions from the previous class on the balance of payment- Commentary 1, final draft


 * __Assessments and Activities__: write first draft of Commentary #2.
 * J-curve review QA
 * [[file:j-cur_exam questions-answers.docx]]

__**October 23rd: BoP quiz**__

__**Happy EID**__

Holiday homework:
 * Read the following topics, activities and related videos. You do not require to submit the following work but it will greatly help your understanding of this section**

__**October**__**:** The relationship between the domestic macroeconomy (prices and interest rates) and international trade (exchange rates and the current and capital accounts).


 * __Homework Due__: Watch the videos linked below.
 * media type="youtube" key="ci0LTZt7Fjs" height="315" width="560"
 * media type="youtube" key="cg17YTtsk2U" height="315" width="560"
 * media type="youtube" key="KthNiXu458I" height="315" width="560"
 * [|Exchange Rate Practice]
 * [|Effect of fiscal policy on exchange rates]
 * [|Methods of currency devaluation]


 * __Assessments and__ __Activities__: Lecture and practice problems


 * //__Lecture__:// The macroeconomy's effect on international trade flows


 * __Practice problems__


 * 1) Purchasing Power Parity
 * 2) Monetary policy and international trade
 * 3) Fiscal policy and international trade

__**October**__**:** Globalization


 * __Homework Due__: Read "The World is Flat" (PDF below)
 * [[file:The World is Flat excerpt.pdf]]


 * __Assessments and Activities__:


 * __//Free-response/problem//__:


 * __Related Readings__
 * [|"In Praise of Cheap Labor"]
 * [|"The Case for Sweatshops"]
 * [|"No Case for Sweatshops"]

__**October**__**:** Globalization


 * __Homework Due__


 * __Read__: "Why the World is Not Flat" (PDF below)
 * __Write__: Two notecard commentaries (one on "The World is Flat" and one on "Why the World is Not Flat"). The notecard commentary should attempt to explain and evaluate one aspect of the reading that is applicable to the concepts we have learned in IB Economics. The commentary should fit on one card and look a lot like a response to an 8-mark "evaluate" (Part D) question on Paper 3 of the IB Exam. [[file:ib-econ/Guidelines for Writing Paper 3.pdf|Click here for an explanation of how to do these kinds of questions]]. There is a rubric below, too, for you to reference.

>>
 * **Article: [[file:Why the World Is not Flat.pdf]]**
 * Rubric: [[file:Note Card Commentary Rubric.pdf]]
 * __Assessments and Activities__: Class discussion and in-class problem
 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * Define terms of trade, Marshall-Lerner condition and the J-curve.
 * Identify and explain two policies that a country could employ to eliminate a current account deficit.
 * Evaluate the significance for less developed countries of a deterioration in the terms of trade.


 * __//Class Discussion//__: Thomas Friedman assumes the the world is flat. Pankaj Ghemawat believes that the world is not flat. What do these authors mean by these assertions and how do they "know" they are correct?


 * __//In-class problem//__: We will work in groups on a problem in international economics.


 * __Related Readings__
 * __[|"In Praise of Cheap Labor"]__
 * [|"The Case for Sweatshops"]
 * [|"No Case for Sweatshops"]

Welcome Back!



__**November 4:**__


 * __Topic__: International Economics


 * __Homework Due__:


 * __Assessments and Activities__: Write your Commentary 2 draft on International Economics.

Test Review:
 * [[file:SL-Q-Section 3.docx]]