- Outline the role of the balance of payments.
- Distinguish between debit items and credit items in the balance of payments.
- Explain the four components of the current account, specifically the balance of trade in goods, the balance of trade in services, income and current transfers.
- Distinguish between a current account deficit and a current account surplus.
- Explain the two components of the capital account, specifically capital transfers and transaction in non-produced, non-financial assets.
- Explain the three main components of the financial account, specifically, direct investment, portfolio investment and reserve assets.
- Explain that the current account balance is equal to the sum of the capital account and financial account balances.
- Examine how the current account and the financial account are interdependent.
- Explain why a deficit in the current account of the balance of payments may result in downward pressure on the exchange rate of the currency.
- Explain why a surplus in the current account of the balance of payments may result in upward pressure on the exchange rate of the currency.
Check out this link to a Slideshare presentation
Fixed exchange rates
Continue on with the booklet you were given to address the objectives for fixed and managed exchange rates, and comparing floating vs fixed.
Freely floating exchange rates
You will receive a packet for this topic.
Use p 311-312 Blink/Dorton to complete this page
Preferential trade agreements
Click here for the stages of economic integration and here for the advantages and disadvantages of trading blocs
Use the article "What is meant by Economic Integration? Is it Efficient within the EU?" to answer the following questions:
Types of trade protection
Arguments for and against trade protection
You will address these objectives in a packet.
Plus there are these case studies... read and answer the questions:
Japan fights to protect rice farming
International caviar trade banned
China anger over EU shoe ruling
If you have finished then look for an article on protectionism yourself... one that you might be able to use for third piece of internal assessment. edit.
Use https://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm and p 265-266 to meet this objective... i.e. make notes on what they are trying to do and how they are doing it
“Did you ever stop to think that you can't leave for your job in the morning without being dependent on most of the world? You get up in the morning and go to the bathroom and reach over for the sponge, and that's handed to you by a Pacific islander. You reach for a bar of soap, and that's given to you at the hands of a Frenchman. And then you go into the kitchen to drink your coffee for the morning, and that's poured into your cup by a South American. And maybe you want tea: that's poured into your cup by a Chinese. Or maybe you're desirous of having cocoa for breakfast, and that's poured into your cup by a West African. And then you reach over for your toast, and that's given to you at the hands of an English- speaking farmer, not to mention the baker. And before you finish eating breakfast in the morning, you've depended on more than half of the world. This is the way our universe is structured; this is its interrelated quality. We aren't going to have peace on earth until we recognize this basic fact of the interrelated structure of all reality.”
—Dr. Martin Luther King Jr. Christmas sermon on peace 1967
The benefits of trade
Click here because every country is the best at something!
You'll receive a packet of resources and here is some additional material:
Once again we are briefly moving sideways into another Development Economics topic. Here are the objectives:
With reference to a specific developing economy, and using appropriate diagrams where relevant, examine how the following factors contribute to economic development.
1. Education and health
2. The use of appropriate technology
3. Access to credit and micro-credit
4. The empowerment of women
5. Income distribution
Part A - use resource A
Choose either Afghanistan or Congo and explain how two or more of the poverty traps depicted in the handout apply to them.
Explain how other institutional, political, social and cultural factors may create obstacles to development – use examples in your explanation.
One problem is inadequate infrastructure - use Kognity to explain ways in which infrastructure contributes to growth and development.
· Education and health - use Resource A and p356-8 of textbook
o The opposite of a vicious cycle is a virtuous cycle, i.e. one with favourable results. Create virtuous cycles depicting the benefits of improved education and improved health.
o What specific things could be done to improve these two areas.
o Use Nepal as an example of correlation between education/health and income levels.
· The use of appropriate technology - use p364-5 of textbook
o What does this mean in terms of both production and consumption?
· Access to credit and micro-credit - use resource A and p362-3 of textbook
o What is credit?
o Why is a sound banking system essential for economic growth and development?
o Create a poverty cycle using LOW SAVINGS as both a beginning and finishing point.
o What specific difficulties exist for the poor in developing countries with regards to obtaining credit?
o What is micro-credit and how does this help development?
o Case-study – Grameen Bank, Kiva (case study/questions - Resource B)
· Empowerment of women
o Use Resource C to give examples of gender inequality and the deprivations faced by women and girls in much of the world.
o What benefits may a country expect if women become more empowered? Resource C and p365 of textbook
o What strategies could be implemented to ensure improved social and economic participation of woman?
· Income distribution - p365-6 of textbook
o How can high levels of income inequality hinder growth and development?
Teacher of IB Economics at the American School of Budapest