TEKS 113.31(d)(3), Social Studies (Economics)
Subject: Economics – High School
TEKS 113.31(d)(3)
Summary of TEKS 113.31(d)(3)
TEKS 113.31(d)(3) is about how countries depend on each other for goods and services. Countries specialize in making certain things, like cars or computers, and then trade with other countries to get things they don’t make themselves. This makes economies grow and creates jobs, but it can also lead to problems if one country relies too much on another. International trade agreements help countries work together to make sure trade is fair and benefits everyone.
Key Concepts of TEKS 113.31(d)(3)
- Specialization: Countries focus on producing goods where they have an advantage.
- Free Trade: Removes barriers to encourage trade and reduce costs.
- Trade Barriers: Protect local industries but can increase consumer costs.
- Exchange Rates: Affect the cost of imports and exports, influencing trade decisions.
Section 1: Why Do Countries Trade?
TEKS 113.31(d)(3)(A)
Explanation: Countries trade because they specialize in making certain goods. When a country focuses on what it does best, it can produce goods more efficiently and trade for other items it needs.
- Absolute Advantage: When a country can produce something more efficiently than another country.
- Comparative Advantage: When a country produces a good at a lower opportunity cost than another country, even if it isn’t the most efficient.
Example of TEKS 113.31(d)(3)(A): The United States specializes in producing high-tech goods like software, while Brazil specializes in coffee. Both countries trade these items because it benefits their economies.
Key Idea: Specialization and trade make economies stronger and more efficient.
Section 2: Free Trade vs. Trade Barriers
TEKS 113.31(d)(3)(B)
Explanation: Free trade encourages countries to trade without restrictions like tariffs, quotas, or subsidies. Trade barriers, on the other hand, limit trade to protect local industries.
- Free Trade: Countries like the U.S. benefit from agreements like the North American Free Trade Agreement (NAFTA) because they reduce costs and increase choices for consumers.
- Trade Barriers: Tariffs (taxes on imports) and quotas (limits on imports) protect local jobs but can raise prices for consumers.
Example of TEKS 113.31(d)(3)(B): Free trade agreements allow cheaper goods to enter the U.S., benefiting consumers. However, trade barriers protect industries like steel from foreign competition.
Key Idea: Free trade boosts global trade, but trade barriers can protect local industries.
Section 3: How Do Exchange Rates Affect Trade?
TEKS 113.31(d)(3)(C)
Explanation: Exchange rates determine the value of one country’s currency compared to another’s. These rates affect the cost of imports and exports.
- Strong Currency: When the U.S. dollar is strong, imported goods become cheaper, but U.S. exports are more expensive for other countries.
- Weak Currency: When the dollar is weak, U.S. exports are cheaper, but imports become more expensive.
Example of TEKS 113.31(d)(3)(C): If the U.S. dollar strengthens against the euro, Americans can buy European products at lower prices. However, European countries might buy fewer American products because they are more expensive.
Key Idea: Exchange rates influence how much countries trade with one another.