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Published byEvan Holmes Modified over 8 years ago
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International Trade
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Basis for International Trade The theory of absolute advantage - the advantage a nation has over other nations in the production of an item if it can produce more of the item over a certain period with a given amount of resources than the other nations can The theory of comparative advantage - the advantage that a nation has over a trading partner in the production of an item if it produces that item at lower opportunity cost per unit than its partner does
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Economic gains from Trade workers in each region can obtain a larger quantity of consumer goods for the same amount of work the national income of each and every trading country rises
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Protectionism vs. Free Trade impacts of a tariff on the domestic market (graph) instruments of protectionism (tariffs x import quotas) the economic costs of tariffs effects of tarrifs on price, imports, domestic production: - encourages inefficient domestic production - induces consumers to reduce their purchases of the tariffed good below efficient levels - raises revenues for the government
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Economic cost of tariff
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Economic integration theory of economic integration (definition, the stages of economic integration..) process of economic integration in Europe
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Foreign exchange market exchange rate the determinants of foreign exchange rates.. devaluation x depreciation, revaluation x appreciation major exchange-rate systems
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