International Economics Flashcards
What is International Economics about?
how nations interact through:
1. trade of goods and services
2. Flows of money
3. Investment
“When a buyer or seller engage in a voluntary transaction, both can be made…”
better off
“Countries use _____ resources to produce what they are most productive at, then trade those products for what they want to consume.”
finite
Trade benefits countries by allowing them to export goods made with relatively ____ resources and import goods made with relatively scarce resources.
abundant
“Trade is predicted to benefit countries as a whole in several ways, but trade may ____ particular groups within a country.”
harm
What is the pattern of trade?
describes who sells what to whom
Why do some countries export certain products? Due to differences in:
- Labor Productivity
- Relative supplies of capital, labor and land, and thier use in the production of different goods and services.
How do policymakers affect trade volume (4)?
- Tariffs: tax on import/export
- Quotas: quantity restriction on import/export
- Export subsidies: a payment to producers that export
- other regulations
“Exchanging risky assets such as stocks and bonds can:
benefit all countries by diversification that reduces the variability of income
What is balance of payments?
Governments measure the value of exports and imports, as well as the value of financial assets that flow into and out of their countries.
What does exchange rate measure?
how much domestic currency can be exchanged for foreign currency
What does international trade focus?
on transactions involving movement of goods and services across nations.
What does international finance focus?
on financial or monetary transaction across nations
What are the seven themes that recur throughout the study of international economics
- Gains from trade
- The pattern of trade
- Protectionism
- The balance of payments
- Exchange rate determination
- International policy coordination
- International capital market
