International Economics Flashcards, test questions and answers
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What is International Economics?
International economics is a branch of economics that studies the interaction between countries in terms of their economic activities. It deals with the growth and development of economies in different parts of the world, as well as their interconnectedness and interdependence. International economics also examines how nations use resources to develop their own economies, and how they trade goods with each other.The main theories that are used in international economics include comparative advantage, balance of payments, exchange rate determination and macroeconomic policy coordination. Comparative advantage suggests that countries should specialize in producing certain goods or services based on their comparative cost advantages. Balance of payments theory looks at how international transactions affect a nation’s balance sheet, while exchange rate determination examines how different currencies interact with each other to determine the value of one currency relative to another. Finally, macroeconomic policy coordination is concerned with collective actions taken by nations in order to achieve desired economic objectives such as economic growth or inflation control.International economics has become increasingly important over the past few decades due to increased globalization and trade liberalization. This has resulted in greater interdependence between nations as well as an increase in cross-border capital flows, labor mobility and migration flows which has had an impact on global financial markets and economies across borders. In addition to these developments, technological advances have made it easier for firms to conduct business on a global scale which has had implications for both domestic and international policies alike. With this increased complexity comes the need for more sophisticated models and techniques that can be used to analyze international trade patterns, market forces and global macroeconomic trends so that governments can make informed decisions about how best to manage their economies on an international level.