Economics_Ch15 - 15(390-427 EMC Chap 15 9:11 AM Page 390 C...

C H A P T E R 1 5
International Trade and
Economic Development
C H A P T E R 1 6
Stocks and Bonds
390

“
An investment in
knowledge always pays
the best interest.
”
— Benjamin Franklin
391

Why It Matters
W
e live in a global economy. Precision
ice hockey equipment is designed in
Sweden, financed in Canada, and
assembled in Cleveland, Ohio. An advertising cam-
paign is conceived in Great Britain, and footage for it
is shot in Canada, dubbed in London, and edited in
New York. A sports car is financed in Japan, designed
in Italy, and assembled in Indiana, Mexico, and
France using advanced electronic components
invented in New Jersey and fabricated in Japan. A jet
plane is designed in the
state of Washington and in
Japan and assembled in
Seattle, with tail cones from
Canada, special tail sections
from China and Italy, and
engines from England.
As Americans deal more
and more with people in
other nations, they may learn
things about other people
that they either did not know
before or did not stop to
think about. This chapter
considers an increasingly
important activity of people
in a global economy: trade.
392
In an increasingly global
economy, the chances are
good that the products
these workers are loading
for shipment will be used
by people on the other
side of the world. In this
chapter you will learn why
people specialize and why
they trade with people in
different countries.

The following events occurred one day
in November.
12:04 P.M. Samantha Lawrence is packing for a trip to
Paris. Tomorrow, at 5:30 p.m., she will leave from JFK Airport in
New York. She will spend five days in Paris, then go to England,
where she will spend two days in London, one day in Oxford,
and then take a train to Scotland, where she will spend four
days in Edinburgh and one day in Glasgow. Although the dollar
has been falling in value relative to the euro and the pound,
she is still going on her trip.
• What does the value of the dollar have to do with a
trip overseas?
1:23 P.M. Carla Rodriguez is a reporter for a local
TV station. She is currently in the office of Vernon Milson,
who owns a small business in New Mexico. Carla
Rodriguez asks, “Is your business expected to increase
its sales this year?” Milson looks at her and says, “A lot
depends on whether the administration in Washington
imposes tariffs on our foreign competitors.”
• How will imposing tariffs on his foreign com-
petitors affect Milson’s business?
3:04 P.M. In Jacob’s family, each person
has certain duties and responsibilities. His mother
and father share responsibilities for the family
finances, shopping, and preparing meals. His
younger sister takes care of the family pets. Jacob’s
job is to take out the trash, keep his room clean,
and mow the lawn. Right now, he is mowing the
lawn. As he mows, he thinks, “I wonder why it is
always my job to mow the lawn.”
• Why do family members often specialize in
performing certain tasks?