• Unit 6: International Trade and Finance

    This unit examines the macroeconomic effects of international flows of financial capital and goods and services. The determinants of exchange rates are identified, and the connection is made between financial capital flows and the trade balance. The unit explores the effects of exchange rates on a country's economy and the economies of its trading partners. The welfare effects of trade are also studied.

    Completing this unit should take you approximately 4 hours.

    • 6.1: International Trade and Capital Flows

      The balance of trade (or trade balance) equals the gap between a nation's exports (what domestic producers sell to foreign nations) and imports (the products and services households and businesses buy from foreign nations). To analyze international trade and finance, we must consider exchange rates and money flows between countries. We also explore the concept of free trade, trade disputes, immigration, and migration between countries.

    • 6.2: Macroeconomic Policy around the World

      International macroeconomics, or international finance, studies monetary interactions between two or more countries, focusing on foreign direct investment and currency exchange rates. The economics of the international economy can be divided into two broad categories: the study of international trade and the study of international money. International economics studies international trade and open economy macroeconomics. The field is in equal parts theoretical and empirical and increasingly seeks a close synthesis of theory and data.

    • 6.3: International Trade

      International trade exchanges capital, goods, and services across borders due to the need or desire for foreign goods and services. International trade is vital for many countries – their exporting and importing patterns represent a significant share of their gross domestic product. This section examines real-world examples that show why countries cannot simply avoid foreign trade by producing everything themselves. Given their climate, geography, available natural resources, and other conditions, countries determine their comparative advantage or what they can sell or export to other countries rather than trying to do it all.

    • 6.4: Globalization and Protectionism

      Globalization refers to how trade and communication technologies make the world more interdependent and connected. Five key factors have promoted recent globalization: free trade, outsourcing, the communications revolution, liberalization, and legal harmonization. The resources in this section examine how trade impacts jobs, wages, and working conditions. What are some arguments for and against protectionism?

    • Unit 6 Assessment

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