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Wisconsin Economic Standard
D.12.8

Specialization and Trade

Explain the basic characteristics of international trade, including absolute and comparative advantage, barriers to trade, exchange rates, and balance of trade

Economic Concepts
Absolute advantage  ||  Comparative advantage  ||  Balance of trade
Exchange rates  ||  Imports  ||  Exports  ||  Tariffs  ||  Quotas

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Links to Content Information

blue check mark CATO Center for Trade Policy Studies - Increasing public understanding of the benefits of free trade and the costs of protectionism.
blue check mark Economic Statistics Briefing Room - Statistical tables on the U.S. in the international economy
blue check mark Global Business - Information and links to trade regulations, trade policy, etiquette, country resources, and issues of free trade.
blue check mark International Trade - Chapter 19 from Essential Principles of Economics: A Hypermedia Text, First Revised Draft
blue check mark Infonation - An easy-to-use, two-step database that allows you to view and compare the most up-to-date statistical data for the Member States of the United Nations. 
blue check mark International Trade Administration
blue check mark PACIFIC Exchange Rate Service
blue check mark Strong Dollar/Weak Dollar - Examines how the U.S. dollars value relates to other countries currencies and how changes in its value affect foreign trade and the U. S. economy.
blue check mark U.S. Department of Commerce - The Department of Commerce promotes job creation, economic growth, sustainable development and improved living standards for all Americans by working in partnership with business, universities, communities and workers.
blue check mark U.S. House of Representatives Subcommittee on International Economic Policy and Trade
blue check mark USDA Economics and Statistics System - Especially see the sections on International Agriculture and Trade Issues.

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Links to Lesson Plans and other Suggested Teaching Strategies

blue arrow The Big Mac Index - Grades 9-12. This lesson helps students understand parity in purchasing power, exchange rates, and currency appreciation and depreciation.
blue arrow Economics and History - Students will investigate the pros and cons of international trade and examine how trade affects specific groups within our economy and several aspects of what prompts nations to enter into trade agreements or leads them down the road of protectionism. Uses the booklet "A World of Choices: Are We Better Off with International Trade?" Adobe Acrobat required. 
blue arrow The Euro Makes Its Debut - Grades 9-12. Looks at the impact of having a centralized monetary policymaking authority.
blue arrow How can business make money from tariffs? - High School.  Students investigate the impact of tariffs on businesses and consumers during the 1880s by looking at a political cartoon, solving a short math problem, and comparing protectionism between time periods. They then generalize about the impact incentives have on encouraging special interest legislation in a democratic government. From Focus on Economics: United States History, �National Council on Economic Education
blue arrow Limiting trade - Middle and High School level.  Students learn about various types of trade     restrictions and their effects by applying a model to determine who will benefit and who will be hurt by a tariff. From Focus on Economics: Geography, �National Council on Economic Education.
blue arrow Malaysian Government Introduces Currency Controls - Students will describe how exchange rates work, identify factors that influence them, and understand the effects of currency appreciation and depreciation on international trade.
blue arrow NAFTA: Are Jobs Being Sucked Out of the United States? - Grades 9-12. Students will explain the concepts of absolute and comparative advantage, present the arguments for and against free trade, and examine data concerning the effects of NAFTA on employment in the United States.
blue arrow Strong Dollar/Weak Dollar - Examines how the U.S. dollars value relates to other countries currencies and how changes in its value affect foreign trade and the U. S. economy. Accompanies student booklet available online or in print.
blue arrow Exchange rates on the Internet - The Universal Currency Converter�, the world's most popular currency tool, allows you to perform interactive foreign exchange rate calculations on the Internet, using live, up-to-the-minute currency rates.
blue arrow U.S. and EU Go Bananas Over Trade - Grades 9-12. Describes  the gains that nations receive when they engage in trade with each other.  Economists point to this "mutually beneficial" characteristic of trade: if both nations weren't better off, the deal wouldn't get done!
blue arrow Why Nations Trade - Middle and High School level.  After discussing the concept of comparative advantage, students in small groups engage in a simulation on the economic costs and benefits of trade. From Focus on Economics: Geography, �National Council on Economic Education.
blue arrow Other Web Sites - This page lists web sites offering a wealth of lesson plans for teaching economics, in addition to these lesson plans.

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List of Curricular Materials and Learning Activities

blue push pin Focus: Middle School Economics  from Economics America (search catalogue), available from Economics Wisconsin. Unit 6, Lesson 17: Don't Fence Me Out - Students explore the impact of various barriers to trade and determine who gains and who loses when trade barriers are imposed. 
blue push pin Focus on Economics: Civics and Government, from Economics America (search catalogue), available from Economics Wisconsin. Lesson 15, Unit 4: Why Would Governments Limit International Trade? - After examining three types of barriers erected by governments to restrict imports of foreign-made products, students debate the pros and cons of imposing barriers. pp. 85-93
blue push pin Focus on Economics: Personal Decision Making, from Economics America (search catalogue), available from Economics Wisconsin. Lesson 15: International Economics: Why Should You Care? - Students study exchange rates, see how depreciation of the dollar could affect American consumers, and analyze effects of a restrictive tariff on different groups of Americans.  pp.147-154
blue push pin Focus on Economics: Geography, from Economics America (search catalogue), available from Economics Wisconsin. Lesson 6: Limiting Trade - Students participate in various activities to evaluate the benefits and costs of tariffs.  pp. 47-51
blue push pin The Basics of Foreign Trade and Exchange - Explains some of the principles underlying current international trade and trade relations between countries, and why international trade and investment take place. Includes a comprehensive description of the foreign exchange market. 1993.  Background information.  Available from Federal Reserve System. To find it, type "basics of foreign trade" (without the quote marks) in the keyword search box and click on Go.
blue push pin Virtual Economics: An Interactive Center for Economic Education, Version 2 - Each exhibit includes teaching tips, background information, a list of lessons, and video and audio clips that give additional information about the topic.  Available from Economics America (search catalogue). 
  • In section International  Economics, see exhibits: 
    • Foreign Exchange and Balance of Payments
    • International Trade
blue push pin Focus on Economics: United States History, from Economics America (search catalogue), available from Economics Wisconsin. Lesson 7--How Can Big Business Make Money from Tariffs? - Students investigate the impact of tariffs on businesses and consumers, then generalize about how incentives  influence special interest legislation.  pp.63-73
blue push pin Focus: International Economics, from Economics America (search catalogue), available from Economics Wisconsin. Relevant lessons: 
  • 1:  Why Do People Trade? - After participating in a trading activity, students compare their behavior with trading behavior that occurs in the economy.  p.1
  • 2:  Why People and Nations Trade - Students apply the principle of comparative advantage to a hypothetical example of international trade.  p.7
  • 3:  Trade and Specialization - Students participate in a classroom simulation to learn how economic welfare is increased by trade and specialization.  To explain this outcome, they apply the principle of comparative advantage to their trading activity.  p.19
  • 6:  The United States and World Trade - Students are introduced to the types of goods involved in U.S. trade (exports and imports), the major U.S. trading partners, U.S. trade statistics, and the importance of opportunity cost in world trade.  p.43
  • 7:  World Trade - Students observe the patterns and direction of trade.  These observations allow them to understand some of the forces that give rise to international trade.  p.51
  • 8:  Trade Barriers - This lesson describes different types of trade barriers and illustrates the gains that can accrue to a small group if the group is successful in imposing a trade barrier.  p.61
  • 9:  Ripples: Trade Barriers and Unintended Consequences - p.77
  • 10:  What Happens Here When Imports Are Banned? - This exercise is designed to isolate the effects of import restrictions on production and consumption patterns., p.81
  • 11:  Balance of Payments - Students learn the basic components of balance of payments and what having a surplus or deficit means in balance of trade, a current account, a capital account, and balance of payments.  p.87
  • 12:  Factors Influencing Balance of Payments - Students consider a variety of international economic activities, noting how each affects the balance of payments and the demand for and supply of dollars.  p.99
  • 14:  Foreign Exchange Rates - p.111
  • 15:  Foreign Currency and Foreign Exchange - p.123
  • 16:  Trade With Japan: How Fair Is It? - This lesson focuses on the U.S. trade relationship with Japan, and more specifically on the free trade vs. fair trade controversy.  p.133
  • 17:  Should a Developing Country Have Free Trade? - After looking at some of the pros and cons of free trade, students form opinions about a protective tariff.  p.145
  • 18:  The NAFTA Debate - Students study the effects of tariffs and identify who gained and who lost when NAFTA was implemented.  p.155

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National Content Standards 5 and 6.

    Scroll down the linked pages to locate the grade 12 benchmarks. 

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Email an expert

     Professor Larry Weiser, University of Wisconsin-Stevens Point

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Developed by 
Lynn Kirby, Ph.D., Education and Technology Consultant and
Larry Weiser, Ph.D., Program Director, EconomicsWisconsin 
University of Wisconsin--Stevens Point