International Trade Chapter 18 by b8REurq

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									International Trade
     Chapter 18
   PPF & Comparative Advantage
A country has a comparative advantage in
producing a good if the opportunity cost of
producing the good is lower for that country than
for other countries.
The Ricardian Model of International Trade:
Assumes straight line production possibility
frontiers.
Autarky is a situation in which a country cannot
trade with other countries.
PPF & Comparative Advantage
Autarky / Closed Economy
Open-Economy – Lower World Price
Open-Economy – Lower World Price
Open-Economy – Higher World Price
Open-Economy – Higher World Price
Exchange Rates
   Chapter 19
Loanable Funds in Two Countries
International Capital Flows
Foreign Exchange Market
Increased Demand for Dollars
Real vs. Nominal
Purchasing Power Parity
Monetary Policy & Exchange Rates

								
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