Chapter 7 - Global Consumers and Markets: Why Are Global...

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Global Consumers and Markets: Why Are Global Markets Important? Scope and growth of world trade o 2010 Top Exporters: China (#1) $1.58 trillion (+31%) US (#2) $1.28 trillion (+21%) Germany (#3) $1.26 trillion (+18%) Volume of world merchandise Exports, 1965 – 2009 (Annual & change) -over a period of decades **Predicting + 6.5% growth in 2011. (increase in world trade) KNOW PATTERNS FOR EXAM! Not specific numbers Balance of Trade Is the US a bigger importer or exporter? o Balance of trade? DEFICIT o US trade Deficit: $681 billion in 2008 $381 billion in 2009 $496 billion in 2010 Recession has eased the deficit! o Trade deficit in goods o Trade surplus in services (transportation, travel, construction, business/financial, technical…)
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-over a smaller period of time Effects of Currency Exchange Rates on Balance of Trade: $1.00 = .74 Euros (before) $1.00 = .70 Euros; a weaker dollar buys less of a currency (when exchange rate changes) When the dollar weakens against another currency: (imports) o A machine from Germany costs MORE, US imports go down o Bad situation for US consumers; good for US producers o Currency changes have good and bad effects – even within a country. When the dollar weakens against another currency: (exports) o A machine from Germany costs more, US imports go down o US drugs cost less in Euros, and exports to Germany go up. o
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Chapter 7 - Global Consumers and Markets: Why Are Global...

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