1. INTERNATIONAL ECONOMICS
WHY DO COUNTRIES TRADE?
1. GET THINGS WHEN THEY DON’T HAVE RESOURCES TO
PRODUCE IT THEMSELVES
2. SPECIALIZE-EFFICIENCY-COMPARATIVE ADVANTAGE
3. LOWER PRICES-COMPETITION

2. COMPARATIVE ADVANTAGE VERSUS ABSOLUTE AVANTAGE
*COUNTRIES SHOULD PRODUCE WHAT THEY HAVE A COMPARATIVE ADVANTAGE IN PRODUCING AND TRADE FOR OTHER GOODS WHY? TRADE SHOULD BE BASED ON WHAT YOU PRODUCE MORE EFFIECIENTLY( COMPARATIVE ADVANTAGE) NOT ON ABILITY TO PRODUCE MORE OF A GOOD THEN ANOTHER COUNTRY(ABSOLUTE ADVANTAGE) *READING ABOUT COFFEE BEANS

3. TRADE BARRIERS VERSUS FREE TRADE
WHY TRADE BARRIERS: 1. PROTECT DOMESTIC INDUSTRIES 2. REDUCE DEPENDENCE ON ANOTHER COUNTRY 3. POLITICAL REASONS-CUBA 4. PROTECT NEW DOMESTIC INDUSTRIES PROTECTIONISM- PROTECT JOBS AT HOME *TRADE BARRIERS LEAD TO HIGHER PRICES *TYPES OF BARRIERS- TARIFFS, EMBARGO, LICENSING, QUOTAS, AND SUBSIDIES *ALL TRADE IS DONE BY FIRMS BUT GOVERNMENTS RESTRICT

4. FREE TRADE
FREE TRADE: 1. ELIMINATION OF TRADE BARRIERS-HAS BEEN INCREASING THROUGHOUT REGIONS IN THE WORLD EXAMPLES-TRADING BLOCKS-NAFTA, EU, AND ASEAN-ELIMINATES TARIFFS AMONG MEMBERS *GOVERNMENT DECISIONS TO REDUCE BARRIERS AND FORM TRADING BLOCKS *INCREASE THE GLOBAL STANDARD OF LIVING

5. EXCHANGE RATES
CURRENCY: 1. EXCHANGED IN FOREX MARKET 2. TRADED BY INDIVIDUALS AND FIRMS 3. FLOAT-BASED ON DEMAND AND SUPPLY 4. CURRENCY VALUES *INCREASE IN DEMAND BY FOREIGNERS WILL INCREASE VALUE OF DOLLAR-IT WILL APPRECIATE-AMERICAN GOODS WILL COST FOREIGNERS MORE MONEY *AN INCREASE IN SUPPLY OF DOLLAR ON FOREX MARKET WILL CAUSE DOLLAR TO DEPRECIATE-FOREIGNERS WILL NOW GET MORE DOLLARS FOR THEIR CURRENCY THAN BEFORE-AMERICAN GOODS WILL COST LESS

6. BALANCE OF PAYMENTS
SUM OF TRANSACTIONS BETWEEN RESIDENTS OF ONE NATION AND RESIDENTS OF ALL FOREIGN NATIONS
*INCLUDES EXPORTS/IMPORTS, GOODS/SERVICES, TOURIST
EXPENDITURES, PURCHASE/SALE OF FINANCIAL OR REAL ASSETS,
AND INTEREST AND DIVIDENDS
2. CURRENT ACCOUNT-RECORDS ON TRADE-TRADE SURPLUS THEN
EXPORTS GREATER THAN IMPORTS(POSITIVE BALANCE)-TRADE
DEFICIT-IMPORTS GREATER THAN EXPORTS(NEGATIVE BALANCE)
CAPITAL AND FINANCIAL ACCOUNT-MONEY FLOWING OUT VERSUS INTO
THE COUNTRY-BUYING OF GOV’T BONDS, STOCK IN A FOREIGN
COMPANY, DIVIDENDS FROM A FOREIGN COMPANY