Tariff A Tax on imported goods How it

Tariff • A Tax on imported goods • How it helps: If foreign-made goods are taxed then they’re more expensive. The less expensive domestic items are more likely to be sold – increasing GDP and keeping workers employed.

Quota • Limiting the amount of goods brought into the country • Example: Germany could decide to only allow 1, 500 cars from Japan to be brought in within the next year. With not so many to sell, German-made cars would sell more • OPEC: Using a quota in how much they export. This controls the price (especially if they want to raise it) – Supply and demand

Embargo • Stopping trade with another country due to political or economic reasons • Example: When Cuba turned Communist the United States placed an embargo on them in hopes of hurting them economically by not buying their goods. • How it helps: If a country can’t make money off trade then the GDP goes down and people lose their jobs. This economic pressure forces countries to evaluate their decisions.

Exchange Rate • Before people from different countries can buy or sell anything to each other, they have to be able to change their money from their country's currency to the seller's national currency. • When we buy oil from Saudi Arabia, we convert their form of currency (riyal) to the dollar. • 1 riyal = 0. 27 dollars

Forms of Capital Human Capital Goods • Knowledge and skills that workers have • Factories, machines and technology that workers use to make other goods • Investing: Education (school) and training for a specific job • Investing: Better technology and more efficient machines

Human Capital and Capital Goods HUMAN CAPITAL GOODS The skills and education of workers The factories and machines used to create OTHER goods st Rather have a 1 grader build your home or a skilled carpenter who’s Would you rather have a new computer been building homes for 20 years? to do research (homework) or use an old You invest in human capital because smarter, better skilled workers make better products computer with a nasty tinted screen? You invest in capital goods because better, faster machines make better products Better products More money Higher GDP for country Better standard of living

Human Capital or Capital Goods?

Human or Capital?