042610 econ exchange rates 50m

Good Day!

DRAW A LINE SEPARATING TODAY & YESTERDAY1) Write: Date: 04/26/10, Topic: Exchange Rates2) On the next line, write “Opener #41” and then:

1) Plot your mood, reflect in 1 sent.2) Respond to the opener by writing at least 2 sentences about:Your opinions/thoughts OR/AND

Questions sparked by the clip OR/AND

Summary of the clip OR/AND

Other things going on in the news.Announcements: NoneIntro Music: Untitled

Agenda1) Introduction to World Trade2) China in the World Economy

End Goal, you will be able to…1) How does China impact the world economy?

Reminder1) No HW (Test on Monday)

Work #41a, Title “Why Trade”Ask your partner (include their name):1) If a doctor needs eggs, why doesn’t a doctor

raise his own chickens?

2) TRADE: Doctor can buy his eggs (organic ones at that), he can now work more, how does that impact the rest of the economy?

TRADE: These jobs would never have existed if the doctor couldn’t trade.

3) Imagine a Cupertino family of 3: mom (scientifically talented)

dad (enjoys knitting), and daughter (musically talented).

This family makes everything themselves. Being self sufficient keeps all 3 busy doing things needed for basic survival (food+shelter).

Would the family be better off if it began to trade (buy items)

instead of making them, EVEN if trade meant the father could

not find a job making clothes, and remained jobless?

4) If the city of Cupertino wants to protect its jobs, should the city pass a law requiring that all goods bought in Cupertino be made in Cupertino?

5) If the state of CA wants to protect its jobs, should the state pass a law requiring that all goods be bought in CA be made in CA?

6) Should the US require all goods bought in the US be made in the US?

If we want everyone to do what is most efficient, and we all benefit from doing what we are most efficient at, why not open this to the whole world?

Notes #41a, Title:

“Trade” 1) Absolute

Advantage: Produce everything better

2) Comparative Advantage: Worth trading, even if you do everything well, so you can focus on what you do best

Notes #41a, Title:

“Trade” 1) Absolute

Advantage: Produce everything better

2) Comparative Advantage: Worth trading, even if you do everything well, so you can focus on what you do best

Notes #41a, Title: “Trade” 3) Exchange Rate: How much of X money it takes

to get Y money (supply + demand)4) Strong Dollar: Other nations want more US $

(good for consumers, bad for US exports)5) Weak Dollar: Other nations want less US $,

others already have too many (bad for consumers, good for US exports)

6) Trade Deficit: More money going out than in

American wants a BMW (3e)

American exchanges $3 for 3e

American pays BMW 3e

American wants to buy 2nd car, but Eur. has surplus US $, it wants more US $ for each euro.

Americahas a trade deficit, BUTLets say as the US dollar gets weaker US buys less BMWs

With weakerUS dollar, Europeansbuys more Fords

Europe’s surplus of US dollars diminishes, which strengthens US dollar, which means US buys more

BMW again.

Americahas a trade deficit, BUTLets sayby not making cars in theUS, It made planes

American wants a ZuZu Pet

American exchanges $3 for 15 yuan

American pays Zuzu Pet

Chinalends US money by buying US Bonds

ChinaBuys US companies+ property

Review1) Weak Money: Takes less foreign

money to buy $1 US dollar. (weak demand)

2) Strong Money: Takes a lot more foreign money to buy $1 US dollar. (strong demand)

Test PracticeLets say $1 US = 100 Japanese Yen$10,000 Ford Focus = 1,000,000 Y1,000,000 Yen Honda Civic = $10,000 US

Weaker Money: Money buy that takes lessforeign money to buy $1 US dollar. $1 US=75 Y$10,000 Ford Focus = 750,000 Y (US supplier happy)

1mil Yen Honda Civic = $13,333 (US shopper sad)

Stronger Money: Money that takes a lot moreforeign money to buy $1 US dollar. $1 US=125 Y$10,000 Ford Focus = 1,250,000 Y (US suppliers sad)

1mil Yen Honda Civic = $8,000 (US shopper happy)

Work #41b, “Exchange Debate”1) Read the 2 sides, choose 1 side, and write

which you choose and explain why.2) Then write down what your partner thinks

(include their name at the end).1 2 3 4 5

Weak Dollar1) More expensive foreign goods and US tourist (harder for consumers)

2) Easier for US companies to sell overseas

Strong Dollar1) Cheaper foreign goods and cheaper for US tourists

2) Easier for foreign companies to sell in America

Work #41c, Title “Euro Exchange”$1 US Dollar used to trade for

1 Euro. NOW $1 US dollars trades for 0.74

Euros.

1) Is the US dollar weaker or stronger now?

2) Who benefits from this current exchange rate AND who suffers?

Work #41c, Title “Euro Exchange”

Takes 1.30 US dollars to buy 1 Euro3) If you went to Ireland to buy an

iPod Nano (135e), how much US dollars would it cost?

Takes 0.74 Euros to buy 1 US dollar4) If the Irish come to the USA to buy

an iPod Nano ($135), how much Euros does it cost?

If the USA can find more productive things to do. Trade will make us richer.

If the USA can’t find more productive things, US will have to lower wages (lifestyle) until they are productive again.

Homework: 1) No Homework