Economics Unit 5 International Trade of Mystery

Transcription

1 The following instructional plan is part of a GaDOE collection of Unit Frameworks, Performance Tasks, examples of Student Work, and Teacher Commentary for the Economics course. Economics Unit 5 International Trade of Mystery Elaborated Unit Focus In this unit, students will demonstrate their knowledge of international economic concepts as they assume the role of their nation s trade experts. They will develop a comprehensive trade policy designed to increase the efficient use of resources and increase their nation s access to product and resource markets around the world. Incorporating the theme of Incentives, students will analyze how various trade policies, barriers, and agreements cause individuals, firms, and nations to respond in predictable ways. Applying the theme of Interdependency, students will discuss how decisions made by one trading partner causes intended and unintended consequences for others and how international exchange rates effect the balance of trade between nations. Using the themes of Gains from Trade and Scarcity, the students apply the law of comparative advantage to their nations production and specialization decisions. They will also evaluate the costs and benefits of their trading relationships, and explain why and how various productive resources must often be redirected to other industries when new trading relationships develop. Standards/Elements SSEIN1 The student will explain why individuals, businesses, and governments trade goods and services. a. Define and distinguish between absolute advantage and comparative advantage. b. Explain that most trade takes place because of comparative advantage in the production of a good or service. c. Explain the difference between balance of trade and balance of payments. SSEIN2 The student will explain why countries sometimes erect trade barriers and sometimes advocate free trade. a. Define trade barriers as tariffs, quotas, embargoes, standards, and subsidies. b. Identify costs and benefits of trade barriers over time. c. List specific examples of trade barriers. d. List specific examples of trading blocks such as the EU, NAFTA, and ASEAN. e. Evaluate arguments for and against free trade. SSEIN3 The student will explain how changes in exchange rates can have an impact on the purchasing power of individuals in the United States and in other countries. a. Define exchange rate as the price of one nation s currency in terms of another nation s currency. b. Locate information on exchange rates. c. Interpret exchange rate tables. d. Explain why, when exchange rates change, some groups benefit and others lose. Enduring Understandings/Essential Questions Interdependency: The student will understand that, because of interdependency, a decision made by one party has intended and unintended consequences on other parties. When the United States has a current account deficit, how is this offset in the financial account? How do trade barriers protect some within the economy and hurt others? When the dollar is weak compared to another nation s currency, who gains and who loses? Updated 9/17/2007 Page 1 of 10

2 Scarcity: The student will understand that scarcity of all resources forces parties to make choices and that these choices always incur a cost. How do changes in exchange rates reflect the condition of scarcity within a nation? How do a nation s limited resources affect its decision to engage in international trade? Incentives: The student will understand that parties respond predictably to positive and negative incentives. What factors affect the supply of and demand for a nation s currency? How would the elimination of agricultural subsidies change the incentives to produce certain crops? What benefits and costs are associated with free trade policies? Gain from Trade: The student will understand that parties trade voluntarily when they expect to gain. Why do specialization and trade lead to increased efficiencies, production, consumption, and satisfaction? How does the use of comparative advantage increase gains from trade for two or more nations? In what ways have you personally benefitted from gains from trade? Updated 9/17/2007 Page 2 of 10

3 *NOTE: The balanced assessment plan included in this unit is presented as a series of suggested activities. It is not expected that the teacher complete all assessments for a successful unit. Balanced Assessment Plan Description of Assessment (Virtual Economics V.3 is a GPS-correlated CD-Rom published by the National Council on Economic Education. In Georgia, teachers may enroll in a training session through and receive this resource at no charge.) Why People Trade Domestically and Internationally (Focus: Globalization Lesson 2) Students participate in a trading game and discuss why people trade. They then apply the concept of comparative advantage to two hypothetical situations involving individuals and countries. They learn why both parties in voluntary trade can benefit by specializing in the production of one good and trading for the other good, even in most cases in which one party can produce more of either good than the other party. Balance of Payments (V.3 Focus: International Economics Lesson 11) Students learn the basic components of the balance of payments and what it means to have a balance of trade surplus or deficit, a current account surplus or deficit, a capital account surplus or deficit, a balance of payments surplus or deficit, and how deficits are ultimately paid for. They see that a current account deficit results when imports exceed exports, or when capital inflows exceed capital outflows. Overheads or readings with balance of payments accounts are given to students. Then, in class discussion, students learn about the various components of these accounts. To Trade or Not to Trade Brochures Using a textbook, the internet, and/or resource material from The Great Awakening unit at students will create tri-fold trade brochures to support or oppose free trade for an assigned nation. The instructor will assign a nation from one of the major trading blocks (NAFTA, the EU, or ASEAN) to each student. The student will research the nation s major imports and exports, describe the trading block in which their nation participates, identify and define any trade barriers between their nation and others within or outside the trading block, and state the arguments in favor of the trade barriers or the arguments against the barriers. After the brochures are complete, the students will use the attached graphic organizer to survey the various trading block, trade blocks, and arguments for/against free trade. Standard/ Element SSIN1 a and b SSIN2 c SSIN2 a-e Type of Assessment *informal observation *discussion and dialogue *constructed response *discussion and dialogue *constructed response *informal observation *discussion and dialogue *constructed response Updated 9/17/2007 Page 3 of 10

4 Foreign Exchange Rates (V.3 Focus: International Economics Lesson 14) Students are shown various newspaper headlines referring to the value of the dollar in foreign exchange markets. They learn what exchange rates are, and participate in a simulation where they discover answers to 10 frequently-asked questions about foreign exchange rates. SSIN3 a,b,c, and d *informal observation *constructed response *discussion and dialogue Updated 9/17/2007 Page 4 of 10

5 Performance Task for Unit #5 International Trade of Mystery Enduring understanding: Interdependency: The student will understand that, because of interdependency, a decision made by one party has intended and unintended consequences on other parties. Scarcity: The student will understand that scarcity of all resources forces parties to make choices and that these choices always incur a cost. Incentives: The student will understand that parties respond predictably to positive and negative incentives. Gain from Trade: The student will understand that parties trade voluntarily when they expect to gain. Performance Task (Note to teachers: This performance task has at least two variations on the description below: 1. An all inclusive, free teaching unit can be downloaded from the Buck Institute website found at This unit, called The Great Awakening, provides a similar task to the one described below. 2. The instructor could select a real nation and assign groups of students a potential trading partner from the real world to research for the trade summit.) You are one of your nation s foremost experts on the economics of international trade. Your nation, due to hostilities within the region, has been self-sufficient for many years. This lack of contact and trade has limited the kind and quantity of many goods and services. The lack of competition with other nations has led to inefficiencies within the private market, and the development of powerful monopolies, and the creation of labor unions within many industries. Recently, new international peace agreements have brought stability to your region. Your prime minister has convened a trade summit at which you and your colleagues will brief government officials on the costs and benefits of free trade with other nations. As part of your summit presentation, you will need to include each of the following: A clear position on international trade for your nation: free trade, trade with barriers for certain industries, or continued self-sufficiency. Evaluate arguments for and against free trade. Using the connecting themes of gains from trade and scarcity, give an explanation of how the principle of comparative advantage can help nations identify strategic trading partners, allocate their resources more efficiently, specialize in goods and services, and expand their production possibilities. Give a real or hypothetical example using your nation and another in your region. Using a chart similar to the one used in your balance of payments activity during this unit, illustrate how your trade recommendations for at least two goods would effect the current and financial accounts for your nation s balance of payments. Define trade barriers such as tariffs, quotas, embargoes, government product standards, and subsidies. Explain how individuals, firms, and/or nations will respond predictably to the positive and negative incentives created by your recommended trade barriers. Tell who in your nation would gain and who would lose from these barriers. Explain the purpose of the EU, NAFTA, and ASEAN. Cite real examples of how nations in these trading blocks have gained from their association Describe how trading blocks illustrate the unit connecting theme of interdependency. Updated 9/17/2007 Page 5 of 10

6 Define exchange rate and describe how fluctuations in rates could affect your nation s trading relationships. Inform summit attendees how to remain up to date on daily changes to worldwide rates of exchange and interpret a sample exchange rate table for the attendees. *Note concerning rubrics: Each performance task is accompanied by two rubrics. The first (with bolded borders) is designed to address content and understanding of the standards in terms of the enduring understandings. The second rubric focuses on the product of the performance task. This is where students are scored on items involving grammar, punctuation, spelling, creativity, presentation, etc. It is NOT intended that each rubric counts for 50% of the assessment. Teachers should weigh each section of the rubric according to the areas they wish to emphasize. Updated 9/17/2007 Page 6 of 10

7 Criteria Scale 1 (Below Standard) Content Rubric for Unit #5 Task: 2 (Needs Improvement) 3 (Meets Standard) 4 (Exceeds Standard) Predicts how individuals, firms, and nations will respond to the positive and negative incentives outlined in the trade recommendations. Explains the interdependent relationship between trading partners and members of trading blocks. Applies the condition of scarcity to a nation s production and trade decisions. Proposes a trade recommendation for the nation, defines five trade barriers OR predicts at least one response to the positive and negative incentives reflected by the trade policies and barriers for ONE of the following: individuals, firms, and nations. Correctly explains at least two out of the four criteria listed for level two. Correctly applies the concept of scarcity to at least two of the criteria described in level two. Proposes a trade recommendation for the nation, defines five trade barriers AND predicts at least one response to the positive and negative incentives reflected by the trade policies and barriers for ONE of the following: individuals, firms, and nations. Correctly explains the purpose of trade associations, describes at least one of the trading blocks and its function, gives one example of how decisions made by one trading partner has intended and unintended consequences for other trading partners, explains the use of the current and capital accounts by nations AND tells how fluctuations in a nation s exchange rate will effect it s balance of trade with other nations. Correctly applies the concept of scarcity to an increase in the efficient use of resources made possible through trade, applies the law of comparative advantage to the recommended production and trade policies, explains the concept of specialization, AND identifies at least ONE instance in which scarce resources will need to be redirected to due to the new trading relationships. Proposes a trade recommendation for the nation, defines five trade barriers AND predicts at least one response to the positive and negative incentives reflected by the trade policies and barriers for EACH of the following: individuals, firms, and nations. Correctly explains the purpose of trade associations, describes all three major trading blocks and the function of each, gives two examples of how decisions made by one trading partner has intended and unintended consequences for other trading partners, explains the use of the current and capital accounts by nations, AND tells how fluctuations in a nation s exchange rate will effect its balance of trade with other nations. Correctly applies the concept of scarcity to an increase in the efficient use of resources made possible through trade, applies the law of comparative advantage to the recommended production and trade policies, explains the concept of specialization, AND identifies at least three instances in which scarce resources will need to be redirected to due to the new trading relationships. In addition to everything in 3, the proposal includes examples of incentives at work in current world trading relationships. In addition to everything in 3, one real world example for each of the following: a dispute among two or more nations involved with NAFTA, the EU, or ASEAN, an unintended consequence of a trading partner s decision, and the effect of a currency exchange rate fluctuation on two countries who trade. In addition to everything in 3, real life examples of two countries using comparative advantage to direct production decision, an evaluation of why these two countries specialize in a particular good(s), AND one example from each nation of a resource that had to be redirected due to specialization. Updated 9/17/2007 Page 7 of 10

8 Scale Criteria Clarity of economic terminology Presentation Skills 1 (Below Expectations) Presenters make no attempt to explain economics terms and concepts in a way that the audience members will understand. Presenters lack two or more of the components outlined in rubric column 3. Q&A Session Presenters lack two or more of the components outlined in level 3. One Stop Shop For Educators Product RUBRIC 2 (Needs Improvement) Presenters regularly slip into pure economic language at the expense of the audience members understanding of the trade recommendations and its effects. Presenters lack one of the components outlined in rubric column 3. Presenters lack one of the components outlined in level 3. 3 (Meets Expectations) Presenters acknowledge that most audience members have limited knowledge of economic concepts without talking down to summit participants. Presenters are dressed in business attire. All group members speak clearly using appropriate professional language. All group members participate equally in the presentation. The presentation includes at least three quality visual aids. Multiple members of the group address questions posed by the trade summit participants, answers to questions are concise and address the question directly, responses for which the group has no credible reply should be tabled for follow-up, AND the group members should not engage in conflict with audience members. 4 (Exceeds Expectations) In addition to everything in 3, presenters consistently use common language and examples to explain economic terminology to summit participants. In addition to everything in 3, a formal electronic presentation of the proposal outlining each of the required elements from the content rubric. Everything in 3 PLUS group members go beyond the scope of their prepared presentation to formulate creative solutions to the problems raised by audience members. Updated 9/17/2007 Page 8 of 10

9 Resources for Unit -Trade Brochure Chart for Balanced Assessment -V.3 Virtual Economics A CD-Rom published by the National Council on Economic Education with 1000s of GPS aligned lessons searchable by concept. This CD can be purchased from or teachers may register for a workshop at during which they will receive training and the CD at no charge. -Focus: Globalization A print publication from the National Council on Economic Education. A free of charge training by the Georgia Council on Economic Education will occur in Spring Visit to register for this workshop. To buy the publication, visit the shop at This page is the gateway to Regional Trade Agreements such as NAFTA, the EU, and ASEAN. - This site is has access to the CIA World Factbook which gives detailed information about individual nations and their trade relationships Specifically, search for: International Trade and Central Banking (a teacher's guide, on-line or print versions available) and Teaching about the Global Economy Using the Internet (an on-line lesson plan) - The location of free, downloadable unit materials for The Great Awakening unit referenced as an alternative under the performance task. *This unit was created by Mark DeCourcy and Sherilyn Narker with additional input from Dr. Bill Cranshaw, Chris Cannon,Marlo Mong, Sarah Brown and the Social Studies Advisory Council. It was updated 9/17/2007. Updated 9/17/2007 Page 9 of 10

10 Trade Brochure Review Organizer Nation Researched Trade Affiliation Imports Exports Trade Barriers One Argument for or against Free Trade Updated 9/17/2007 Page 10 of 10