Real-world examples of economic interdependence between nations

📚 Quick Study Guide

• 🌍 Definition: Economic interdependence means countries rely on each other for goods, services, and resources.
• 🤝 Trade: Countries specialize in producing certain goods/services and trade with others.
• 💸 Foreign Investment: Companies invest in businesses in other countries, creating jobs and boosting economies.
• ⛓️ Supply Chains: Production processes often involve multiple countries, each contributing a stage.
• ⚖️ Comparative Advantage: Countries produce goods/services at a lower opportunity cost than others.
• 💡 Benefits: Increased efficiency, lower prices for consumers, economic growth.
• ⚠️ Risks: Dependence on other countries, vulnerability to global economic shocks.

Practice Quiz

1. Which of the following is the BEST example of economic interdependence?
   1. A) A country only consumes goods produced within its borders.
   2. B) A country exports oil and imports cars.
   3. C) A country is completely self-sufficient and has no trade relations.
   4. D) A country bans all foreign investment.
2. A company from the United States building a factory in Vietnam is an example of:
   1. A) Protectionism
   2. B) Foreign Investment
   3. C) Trade barrier
   4. D) Economic Isolation
3. What is comparative advantage?
   1. A) The ability to produce a good at a higher cost than another country.
   2. B) The ability to produce a good at a lower opportunity cost than another country.
   3. C) The total value of goods and services produced in a country.
   4. D) A trade surplus.
4. Which of these is a potential RISK of economic interdependence?
   1. A) Lower prices for consumers.
   2. B) Increased efficiency in production.
   3. C) Vulnerability to economic problems in other countries.
   4. D) Greater product variety.
5. A disruption in the supply of semiconductors from Taiwan would MOST likely affect which industry globally?
   1. A) Agriculture
   2. B) Automobile Manufacturing
   3. C) Textile Production
   4. D) Mining
6. Saudi Arabia specializing in oil production and exporting it to other countries exemplifies:
   1. A) Economic diversification
   2. B) Absolute advantage in all industries
   3. C) Specialization and trade
   4. D) Economic isolationism
7. The European Union is an example of economic interdependence because member countries:
   1. A) Impose high tariffs on trade with each other.
   2. B) Have completely independent economies.
   3. C) Have free trade and coordinated economic policies.
   4. D) Restrict the movement of labor.