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Balance of Trade
The difference between a country's exports and imports
Export-Import
The activity of selling goods to other countries (export) and buying goods from other countries (import)
Trade Surplus
Occurs when a country exports more than it imports (E > I)
Trade Deficit
Occurs when a country imports more than it exports (E < I)
Balance of Payments (BOP)
The difference between a country's exports and imports plus net income (TOtal E - Total I + net income)
BOP Other Equation
The sum of current accounts
Net Income Examples
Foreign investments
Favorable Balance
When more money goes into a country than goes out
Dumping
Selling a product in another country for cheaper than where it is made
Goal of BOP
Achieve equilibrium between exports
Importance of Global Experience
Many companies value employees with international experience
Importing
Buying products from outside the country
Exporting
Selling products to outside the country
Global Trade Types
Importing and exporting
Global Trade
Helps in selling what countries are good at and buying what they need
US
Largest importer
China
Largest exporter
Why Trade with Other Countries?
Not all countries can make every product they need
Free Trade
Shipping products without political barriers
Advantages of Free Trade
Access to a global market of 7.7 billion customers.
Advantages of Free Trade
Increased productivity from focusing on comparative advantages.
Advantages of Free Trade
Keeps prices down
Advantages of Free Trade
Encourages innovation and competitive business practices.
Advantages of Free Trade
Provides access to foreign investments
Solution to Expensive Banks
Providing credit cards to reduce reliance on checks and make banking operations more cost-effective
Electronic Funds Transfer (EFT) System
Sending transaction messages between computers
EFT Types
Debit card
Debit Cards
Function like checks
Payroll Debit Cards
Offer an efficient payment method for firms to pay workers
Smart Cards
Cards combining many tools like credit
Automatic Transactions
Direct Deposit
Direct Deposit
Putting money into someone's account
Direct Payment
Paying using a card or online
Advantages of Online Banks
Higher interest rates and lower fees compared to traditional banks
Disadvantages of Online Banks
Pose security risks as they store sensitive information online
Debit Card Advantages
No interest charged
Debit Card Advantages
Can receive cash from ATMs
Debit Card Advantages
Transactions declined if insufficient funds
Debit Card Advantages
Money directly deducted from checking or savings account
Debit Card Disadvantages
No borrowing ability
Debit Card Disadvantages
If lost
Debit Card Disadvantages
Limited usage for large purchases
Debit Card Disadvantages
No perks like rewards or cashback
Debit Card Disadvantages
Can't build credit history
Credit Card
Involves borrowing money from the credit card company
Credit Card Advantages
Allows borrowing and repayment at a later date
Credit Card Advantages
Useful for emergencies
Credit Card Advantages
Provides extra perks like rewards and cashback
Credit Card Advantages
Offers theft protection
Credit Card Disadvantages
May incur interest if the balance is not paid in full
Credit Card Disadvantages
Potential for late fees if payments are missed
Credit Card Disadvantages
Impacts credit score
Credit Card Disadvantages
Can lead to unnecessary debt accumulation
Types of Financial Institutions
Commercial Banks
Commercial Banks
Profit-driven institutions that collect money from people and businesses and lend it out to others
Types of Bank Customers
Those who deposit money and those who borrow money
Commercial Banks Profit Method
Making more money from loans and investments than they pay out in interest and expenses
Services Provided by Commercial Banks
Demand Deposits
Demand Deposits
Checking accounts where you can easily access your money
Time Deposits
Savings accounts where you need to notify before taking out money
Certificate of Depositors (CD)
Put money into an account until maturity
Factors for Loans
Depend on how reliable and creditworthy customers are
Savings and Loan Associations (S&Ls) Origin
Started in 1831 to encourage buying homes
Savings and Loan Associations (S&Ls) Evolution
Offering high interest to becoming more like banks
Savings and Loan Associations (S&Ls) Failure
Due to inflation
Credit Unions
Nonprofit cooperatives owned by members
Credit Unions Services Provided
Checking accounts
Do Credit Unions Suffer from FED Taxes?
No
Nonbanks
Financial institutions similar to banks but don't take deposits
Nonbanks Examples
Insurance companies
Nonbanks Services
Investments
Pension Funds
Money saved for people who retire
Brokerage Firms
Sell bonds and stock
Note 
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