Description

The introduction to International Economics explains why countries trade with one another and how international economic relationships affect businesses, consumers, governments, and economies.

The book is broadly divided into international trade and international finance/open-economy macroeconomics.

Main ideas:

• International trade: Countries exchange goods and services because they differ in resources, technology, productivity, and costs.
• Comparative advantage: Even when one country is more productive in everything, countries can still benefit from specializing in what they produce relatively efficiently and trading with others.
• Gains from trade: International trade can increase the variety of goods available and allow countries to use their resources more efficiently.
• Trade policy: Governments sometimes restrict or influence trade through tariffs, import quotas, export subsidies, and other policies.
• Exchange rates: International economics also examines how currencies are valued and how changes in exchange rates affect trade and the economy.