Welcome to EC 382: International Economics By: Dr. Jacqueline Khorassani Study Guide Week One (Note: You must go over these slides and complete every task outlined here before Wednesday, September 5)

1. Study the Course Contract available on line at Click on Fall 2007 Courses Click on EC 382 Click on Course Contract –It is in Microsoft Word format Make sure you understand the contract Ask me questions via an to or in

2. Study the textbook’s Preface Believe me it is not a waste of time to read the Preface of a book Ask me Questions via an or in class.

3. Check out the textbook resources at

Chapter 1: Make sure you understand the following topics and can answer the related questions. If not, ask me your questions via an or in class. Macro/Microeconomics –How are they different from each other? –What are some topics that are covered in macro/micro? International Economics –What is it all about? GDP –What does it measure? –Why do we measure GDP? –What are the components of GDP? –What is per capita GDP?

Chapter 1 continued What is the relationship between a nation’s income and its exports? Imports? Empirical Evidence: high income economies import and export more than middle and low income economies (Table 1.2) What are the multinational corporations? What is the difference between foreign portfolio investment and foreign direct investment? What is the foreign exchange rate?

Chapter 2: Make sure you understand the following topics and can answer the related questions. If not, ask me your questions via an or in class. What are the similarities and the differences between international and interregional trade? Make sure you understand Figure 2.1 and the discussion that goes along with it –What are the main points of this discussion? –Why do the two nations trade? –How does the trade affect the price in each country? –Is everyone better off? –What is the effect of trade

Chapter 2 continued Mercantilism (1700s) –Why did they stress exports over imports? –What does it mean when they say trade is a zero sum activity? Adam Smith (1723 (Scotland)-1790) –What did he mean when he said that trade was not a zero sum activity? –What does absolute advantage mean? David Ricardo (1772(Netherlands)-1823) –What was his major contribution? –How is comparative advantage different from absolute advantage? –Can a nation have comparative advantage but absolute disadvantage in production of good “A”? If so, how? If not, why not?