| Steven M. Reff Economics Lecturer University of Arizona (2007 - 2016) The 2015 University of Arizona Five-Star Faculty Award |
| Week 16: International Trade |
| Estimated Learning Time: 5 to 6 class periods (45 min. each) |
| "In an on-level high school economics course, the exchange rate unit typically bridges the gap between Macroeconomics and International Trade. The focus is on how currencies interact to facilitate global commerce and how their shifting values impact everyday consumers." Ask Google AI 6 |
| Standard 16: International Trade -- Exchange Rates |
(3:22 minutes)
(3:39 minutes)
(3:45 minutes)
(1:54 minutes)
In the foreign exchange market, one currency is exchanged for another; the price of one currency in
terms of the other is the exchange rate.
If one currency becomes more valuable in terms of the other, it is said to appreciate.
If one currency becomes less valuable in terms of the other, it is said to depreciate.
terms of the other is the exchange rate.
If one currency becomes more valuable in terms of the other, it is said to appreciate.
If one currency becomes less valuable in terms of the other, it is said to depreciate.
The demand for a currency in a foreign exchange market arises from the demand for the country’s
goods, services, and financial assets and shows the inverse relationship between the exchange rate
and the quantity demanded of currency.
The supply of a currency in a foreign exchange market arises from making payments in other
currencies and shows the positive relationship between the exchange rate and the quantity supplied
of a currency.
In the foreign exchange market, equilibrium is achieved when the exchange rate is such that the
quantities demanded and supplied of the currency are equal.
goods, services, and financial assets and shows the inverse relationship between the exchange rate
and the quantity demanded of currency.
The supply of a currency in a foreign exchange market arises from making payments in other
currencies and shows the positive relationship between the exchange rate and the quantity supplied
of a currency.
In the foreign exchange market, equilibrium is achieved when the exchange rate is such that the
quantities demanded and supplied of the currency are equal.
Factors that shift the demand for a currency (such as the demand for that country’s goods, services,
or assets) and the supply of a currency (such as tariffs or quotas on the other country’s goods and
services) change the equilibrium exchange rate.
Fiscal policy can influence aggregate demand, real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand, real output, the price level, and interest rates, and
thereby affect exchange rates.
or assets) and the supply of a currency (such as tariffs or quotas on the other country’s goods and
services) change the equilibrium exchange rate.
Fiscal policy can influence aggregate demand, real output, the price level, and exchange rates.
Monetary policy can influence aggregate demand, real output, the price level, and interest rates, and
thereby affect exchange rates.
Open Economy -- Same Questions as Above with ASAD and
Loanable Funds Graphs (Minimize Screen)
Loanable Funds Graphs (Minimize Screen)
(Minimize Screen)
(Minimize Screen)
NOTE: Reffonomics Baseball can be played inside a classroom or all the questions in
the game can be answered individually as homework.
the game can be answered individually as homework.
| Standard 16: Economics Baseball -- Currency Exchange Market |
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| Standards 16: Quiz for Weeks 15 - 16 |
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(2:09 minutes)
(5:36 minutes)
(2:40 minutes)
(17:12 minutes)
| Standard 16: International Trade -- Change in the Value of Currency |
eReading Assignment -- Chapter 29:
eVideo Book -- Chapter 29:
| The term balance of trade is standard in on-level high school economics courses, typically appearing within a unit on International Economics Google ASK AI 3 |
(3:22 minutes)
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(Make sure you take the 3 multiple choice questions underneath the video.)
| Standard 16: International Trade -- Balance of Trade |
| Governments use additional tariffs primarily to protect domestic industries, generate revenue, and gain leverage in political or trade negotiations. As of April 2026, recent trade policies, particularly in the United States, have expanded the use of tariffs to address broader concerns like national security, border control, and supply chain independence. Key Reasons for Additional Tariffs Protecting Domestic Industries: By making foreign products more expensive, tariffs encourage consumers to buy locally, which can help "reshore" manufacturing and create domestic jobs. This is often used for "strategic" sectors like steel, aluminum, and semiconductors. National & Economic Security: Governments may impose tariffs on essential goods (like pharmaceuticals or critical minerals) to ensure they aren't dependent on foreign adversaries during a crisis. Trade Negotiation Leverage: Tariffs can be a "bargaining chip" to force other countries to lower their own trade barriers or stop "dumping"—the practice of selling goods at artificially low prices to put local companies out of business. Google ASK AI: 2 |
Interactive Activities -- Chapter 30:
(2:38 minutes)
(Make sure you take the 3 multiple choice questions underneath the video.)
eReading Assignment -- Chapter 30:
| Teaching the Balance of Payments (BOP) at an on-level high school level is most effective when framed as a "national checkbook" or "financial report card" that tracks all money moving in and out of a country. Investopedia To keep it simple, focus on these three core pillars: 1. The "Two-Account" Framework Instead of diving into complex sub-accounts, stick to the two main categories that capture almost all transactions: Current Account (The "Stuff" Account): Records the flow of goods and services (exports and imports). If a student buys a smartphone from another country, it's recorded here as a debit because money leaves the country. Capital & Financial Account (The "Assets" Account): Records the flow of money for investments, such as buying stocks, bonds, or real estate in another country. Khan Academy 2. Simple Definitions of Inflows vs. Outflows Help students categorize transactions using a basic credit/debit system: Credits (+): Any transaction that brings money into the country (e.g., selling cars abroad, foreign tourists visiting). Debits (-): Any transaction that causes money to leave the country (e.g., buying foreign electronics, sending money to family abroad). Khan Academy 3. The "Zero Balance" Rule A key conceptual breakthrough for students is understanding that BOP must always equal zero. EconEdLink The Mirror Image: If a country has a Current Account Deficit (it buys more "stuff" than it sells), it must have a Capital Account Surplus (it sells "assets" or borrows money to pay for that stuff). Analogy: If you spend more than you earn (Current Account deficit), you either have to use your savings or borrow money (Capital Account surplus) to cover the difference. Google Ask AI: 5 |
eVideo Book -- Chapter 30:
| Students in an on-level high school economics course typically learn about international trade, but their exposure to the balance of payments (BOP) is often much more limited compared to an Advanced Placement (AP) course. Google ASK AI 4 |
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| Standard 15: International Trade -- Balance of Payments |
This section on International Trade -- Balance of Payments will be DIFFICULT for many of you.
This short-section will only have one multiple choice question on your final exam covering the
Balance of Payments
This short-section will only have one multiple choice question on your final exam covering the
Balance of Payments
| Tariffs and quotas are standard components of an on-level high school economics course. They are typically taught within a unit on International Trade or Global Economics. Google ASK AI 1 |
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| Standard 16: International Trade -- Tariffs and Quotas |
(3:01 minutes)
(Make sure you take the 3 multiple choice questions underneath the video.)
(6:00 minutes)
(3:00 minutes)
(Make sure you take the 3 multiple choice questions underneath the video.)
eReading Assignments -- Chapter 28:
Interactive Activities -- Chapter 28:
eVideo Book -- Chapter 28:
| International Trade 16: Economics Baseball Tariffs and Quotas |
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| See if You Smart Enough to Answer College-Level Question on Balance of Payments? |
NOTE: Reffonomics Baseball can be played inside a classroom or all the questions in
the game can be answered individually as homework.
the game can be answered individually as homework.
(5:10 minutes)
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eInteractive Activities -- Chapter 31:
eReading Assignment -- Chapter 31:
eVideo Book -- Chapter 31:
(Make sure you take the 3 multiple choice questions underneath the video.)
(Make sure you take the 3 multiple choice questions underneath the video.)
eShortvideos -- Chapter 31:
eLongvideo -- Chapter 32:
(Make sure you take the 3 multiple choice questions underneath the video.)
(Make sure you take the 3 multiple choice questions underneath the video.)
(Make sure you take the 3 multiple choice questions underneath the video.)
eInteractive Activities -- Chapter 32:
eVideo Book -- Chapter 32:
| See if You Smart Enough to Answer College-Level Questions about Loanable Funds? |
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| See if You Smart Enough to Answer College-Level Questions on World Trade & Tariff? |
Longer eVideos -- Chapter 28:
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(Enlarge video)
(Enlarge video)