Explain how currencies of different nations are exchanged when international transactions take place.

Course: Principles of Microeconomics

Module 8: International Economics

Goals

After completing this module, you will be able to do the following:

⦁ List and discuss several key facts about international trade.
⦁ Define comparative advantage, and demonstrate how specialization and trade add to a nation’s output.
⦁ Describe how differences between world prices and domestic prices prompt exports and imports.
⦁ Analyze the economic effects of tariffs and quotas.
⦁ Analyze the validity of the most frequently presented arguments for protectionism.
⦁ Identify and explain the objectives of GATT, WTO, EU, Eurozone, and NAFTA, and discuss off shoring and trade adjustment assistance.
⦁ Explain how currencies of different nations are exchanged when international transactions take place.
⦁ Analyze the balance sheet the United States uses to account for the international payments it makes and receives.
⦁ Discuss how exchange rates are determined in currency markets that have flexible exchange rates.
⦁ Describe the difference between flexible exchange rates and fixed exchange rates.
⦁ Explain the current system of managed floating exchange rates.
⦁ Identify the causes and consequences of recent U. S. trade deficits.
⦁ Describe how the World Bank distinguishes between industrially advanced countries (high-income nations) and developing countries (middle-income and low-income nations).
⦁ List some of the obstacles to economic development.
⦁ Explain the vicious circle of poverty that afflicts low-income nations.
⦁ Discuss the role of government in promoting economic development within low-income nations.
⦁ Describe how industrial nations attempt to aid low-income countries.