Free Printable Worksheets for learning International Economics at the College level

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International Economics

Key Concepts:

  • International trade - exchange of goods and services across international borders
  • Balance of Payments - records all financial transactions between a country and the rest of the world
  • Exchange rates - the price of a currency in terms of another currency, determines the value of a country's monetary unit in terms of other countries' monetary units
  • International monetary system - a network of international agreements and institutions that govern exchange rates and related matters

Important Terms:

  • Trade deficit - occurs when a country imports more than it exports
  • Trade surplus - occurs when a country exports more than it imports
  • Tariff - a tax on imports
  • Quota - a limit on the quantity of a good that can be imported
  • Protectionism - the use of trade barriers to protect domestic industries from foreign competition

Theories of International Trade:

  • Comparative advantage - a country should specialize in producing and exporting goods in which it is relatively more efficient and import goods in which it is relatively less efficient
  • Absolute advantage - a country should produce and export goods in which it is more efficient than any other country
  • Factor endowment - a country should export goods that use its abundant factors of production and import goods that use its scarce factors of production

International Organizations:

  • World Trade Organization (WTO) - promotes free and fair trade among member countries
  • International Monetary Fund (IMF) - provides financial assistance and helps countries maintain stable exchange rates
  • World Bank - provides loans to developing countries to support economic development

Takeaways:

  • International trade can bring economic benefits by increasing access to goods and services and promoting specialization and efficiency.
  • However, trade deficits can have negative effects on a country's economy.
  • Exchange rates and international monetary policies can have significant impacts on trade and economic stability.
  • Theories of international trade and international organizations play important roles in shaping international economic policies.

Here's some sample International Economics vocabulary lists Sign in to generate your own vocabulary list worksheet.

Word Definition
Globalization the process of businesses, technologies, or philosophies spreading throughout the world, or the result of this process
Trade the activity of buying and selling goods and/or services
Tariff a tax on goods coming into or leaving a country
Free trade a policy followed by some international markets in which countries' governments do not restrict imports from, or exports to, other countries
Import a product or service that is brought into one country from another
Export a product or service that is made in one country and sold in another
Balance of trade the difference between the value of a country's imports and the value of its exports for a given time period
Exchange rate the value of one currency for the purpose of conversion to another
Protectionism the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports
Quota a limited quantity of a particular product that a country allows to be imported, usually with tax and duty charged
GDP Gross Domestic Product - the total value of goods produced and services provided in a country during one year
Inflation a general increase in prices and fall in the purchasing value of money
Deflation a general decrease in prices and increase in the purchasing value of money
Devaluation the act of decreasing the value of a currency in relation to other currencies or of a currency being devalued
Stagflation a situation in which the inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high
Subsidy a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive
Comparative advantage the ability of a country, individual, company or region to produce a good or service at a lower opportunity cost than its competitors
Protectionism the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports
Exchange rate fluctuation the movement or change of the value of a currency relative to another currency
Human Development Index an international standard for measuring the well-being of people in different countries, created by the United Nations Development Programme (UNDP)

Here's some sample International Economics study guides Sign in to generate your own study guide worksheet.

Study Guide: International Economics

Introduction

International Economics is a subfield of economics that deals with the exchange of goods and services between countries. This study guide will provide you with an in-depth understanding of key concepts and theories in international economics.

Key Concepts

  • Comparative Advantage: This concept refers to a country's ability to produce a good or service at a lower opportunity cost than another country. A country with a comparative advantage in a particular good or service should specialize in producing that good or service and trade with other countries to maximize overall welfare.

  • Balance of Trade: This refers to the difference between a country's exports and imports. A positive balance of trade occurs when a country exports more than it imports, while a negative balance of trade occurs when a country imports more than it exports.

  • Exchange Rates: This refers to the price of one currency in terms of another currency. Exchange rates are determined by supply and demand and can have a significant impact on international trade and investment flows.

  • Protectionism: This refers to government policies that restrict or limit international trade. Examples of protectionist policies include tariffs, quotas, and subsidies.

  • Foreign Direct Investment: This refers to investments made by a company or individual in a foreign country. FDI can have a significant impact on economic growth and development.

Theories of International Trade

  • Mercantilism: This theory suggests that a country's wealth is determined by its holdings of gold and silver. Mercantilists believe that a country should maximize its exports and minimize its imports in order to accumulate more gold and silver.

  • Absolute Advantage: This theory suggests that a country should specialize in producing goods that it can produce more efficiently and productively than other countries.

  • Comparative Advantage: This theory suggests that a country should specialize in producing goods that it can produce at a lower opportunity cost than other countries.

  • Factor Endowment: This theory suggests that a country's factor endowments (such as labor, capital, and natural resources) determine its comparative advantage. A country with abundant labor should specialize in producing labor-intensive goods, while a country with abundant capital should specialize in producing capital-intensive goods.

Current Issues in International Economics

  • Globalization: This refers to the increasing integration of economies across borders. Globalization has led to increased international trade and investment, but has also resulted in job losses and increased economic inequality in some countries.

  • Free Trade Agreements: These agreements are treaties between countries that aim to reduce barriers to trade and investment. Examples of free trade agreements include NAFTA and the TPP.

  • Protectionism: There has been a recent trend towards protectionist policies in some countries, particularly in response to concerns about job losses and economic inequality.

  • Currency Wars: These occur when countries manipulate their exchange rates to gain a competitive advantage in international trade.

Conclusion

This study guide has provided an overview of key concepts and theories in international economics, as well as current issues in the field. By understanding these concepts, you will be better equipped to analyze international trade and investment flows, as well as the impact of government policies on the global economy.

Here's some sample International Economics practice sheets Sign in to generate your own practice sheet worksheet.

Practice Sheet: International Economics

  1. What is the difference between absolute advantage and comparative advantage?
  2. Define trade surplus and trade deficit.
  3. Explain the difference between devaluation and depreciation.
  4. What is the importance of exchange rates in international trade?
  5. Define tariff and quota.
  6. How does a country's balance of payment affect its economy?
  7. Explain the benefits and drawbacks of free trade.
  8. How does globalization impact international trade?
  9. What is the role of the World Trade Organization (WTO) in international trade?
  10. Define foreign direct investment (FDI) and explain its significance in international economics.

Note: Please provide detailed explanations for each question. Use examples wherever possible to clarify your answer.

Sample Practice Problem

Suppose a country's production of a good is subject to increasing returns to scale and the country has a comparative advantage in producing that good.

  1. What is meant by increasing returns to scale?
  2. What is meant by comparative advantage?
  3. How does increasing returns to scale affect the country's comparative advantage?

Increasing Returns to Scale

Increasing returns to scale occurs when the output of a good increases by more than the increase in the inputs used to produce the good. This means that the average cost of production decreases as output increases.

Comparative Advantage

Comparative advantage is a concept in economics that states that a country has an advantage in producing a good if it can produce that good at a lower opportunity cost than other countries. This means that the country can produce the good more efficiently than other countries.

Effect of Increasing Returns to Scale on Comparative Advantage

Increasing returns to scale can increase a country's comparative advantage in producing a good. This is because the average cost of production decreases as output increases, which means that the country can produce the good more efficiently than other countries. This makes the country more competitive in the international market and can lead to an increase in the country's exports of the good.

International Economics Practice Sheet

Questions

  1. What is the difference between absolute and comparative advantage?
  2. What is the role of the WTO in international trade?
  3. What is the Heckscher-Ohlin model?
  4. What are the implications of the Mundell-Fleming model?
  5. What is the importance of exchange rate determination?
  6. How do tariffs affect international trade?
  7. What is the purpose of the balance of payments?
  8. What is the difference between free trade and protectionism?
  9. What is the purpose of the International Monetary Fund (IMF)?
  10. What are the main determinants of international capital flows?

Here's some sample International Economics quizzes Sign in to generate your own quiz worksheet.

Problem Answer
Explain the concept of balance of payments. The balance of payments (BOP) is a statistical record of a country's International economic transactions over a certain period of time. It consists of a summary of all the economic transactions between one country and the rest of the world.
Define and differentiate between current account and capital account. The current account represents a country's net income over a certain period of time, while the Capital Account is the net change in ownership of national assets. The balance of both accounts represents the overall balance of payments of a country.
What is Purchasing Power Parity (PPP)? Purchasing Power Parity (PPP) is the economic theory that suggests that the exchange rates between countries should adjust based on the relative price levels of similar goods in different countries.
Explain the Heckscher-Ohlin theorem. The Heckscher-Ohlin theorem proposes that a country will export goods that make intensive use of its abundant and cheap factor of production, while importing goods that make intensive use of its scarcer factors.
Differentiate between floating and fixed exchange rate regimes. Under a fixed exchange rate regime, the exchange rate between countries is set and maintained by the government. In contrast, under a floating exchange rate regime, exchange rates fluctuate based on supply and demand in the foreign exchange market.
Discuss the effects of currency devaluation on a country's exports. Currency devaluation makes a country's exports more competitive by lowering their price on the international market. As a result, demand for the country's exports increases, which could lead to higher volume and revenue from exports.
Explain why countries pursue a policy of import substitution. Countries pursue a policy of import substitution when they want to reduce their reliance on imported goods and promote domestic production of those goods. This policy aims to protect domestic producers from foreign competition by imposing tariffs or other trade barriers.
What is the Triffin dilemma and how does it relate to the US dollar? The Triffin dilemma refers to the paradox whereby the US, whose dollar is the international reserve currency, has to run persistent trade deficits to meet global demand for dollars. This imposes a long-term cost on the US economy and the stability of the global financial system.
Explain the difference between a tariff and a quota. A tariff is a tax on imported goods that raises their price, while a quota is a limit on the quantity of a good that can be imported. Both policies are designed to reduce imports and protect domestic industries.
What is the Marshall-Lerner Condition and how does it impact a country's trade balance? The Marshall-Lerner Condition is a theoretical economic concept that suggests a depreciation of a country's exchange rate will only have a positive impact on the trade balance if the sum of price elasticities of exports and imports is greater than one. This will lead to an improvement in the trade balance over time.

International Economics Quiz

Problem Answer
What is the difference between a closed economy and an open economy? A closed economy is one that does not engage in international trade, while an open economy is one that does engage in international trade.
What is the difference between absolute and comparative advantage? Absolute advantage is the ability of a country to produce a good at a lower cost than another country, while comparative advantage is the ability of a country to produce a good at a lower opportunity cost than another country.
What is the difference between a fixed exchange rate and a floating exchange rate? A fixed exchange rate is a rate that is set by a government and is not allowed to fluctuate, while a floating exchange rate is a rate that is determined by the forces of supply and demand in the market.
What is the difference between a tariff and a quota? A tariff is a tax on imports, while a quota is a limit on the amount of imports that can be brought into a country.
What is the purpose of the World Trade Organization (WTO)? The purpose of the WTO is to promote free and fair trade among its member countries by setting rules and regulations for international trade.
What is the difference between a free trade agreement and a customs union? A free trade agreement is an agreement between two or more countries to reduce or eliminate trade barriers, while a customs union is an agreement between two or more countries to remove trade barriers and establish a common external tariff on imports from non-member countries.
What is the difference between a balance of payments and a balance of trade? A balance of payments is a record of all economic transactions between a country and the rest of the world, while a balance of trade is a record of the value of a country's exports minus the value of its imports.
What is the difference between a devaluation and a revaluation of a currency? A devaluation is a decrease in the value of a currency relative to other currencies, while a revaluation is an increase in the value of a currency relative to other currencies.
What is the difference between a managed float and a dirty float? A managed float is a system in which a government intervenes in the foreign exchange market in order to influence the value of its currency, while a dirty float is a system in which a government does not intervene in the foreign exchange market and allows the value of its currency to be determined by market forces.
What is the purpose of the International Monetary Fund (IMF)? The purpose of the IMF is to promote international economic cooperation and stability by providing loans to countries in need of financial assistance and by providing technical assistance to countries in need of economic advice.

Quiz for International Economics

Question Answer
What is the term for the flow of goods, services, and capital from one country to another? International trade
What is the term for the process of removing trade barriers between countries? Trade liberalization
What is the term for an agreement between two or more countries to eliminate or reduce trade barriers? Free trade agreement
What is the term for the rate at which one currency can be exchanged for another? Exchange rate
What is the term for the use of tariffs and other restrictions on imports to protect domestic industries? Protectionism
What is the term for the period of time when the exchange rate between two currencies is fixed? Exchange rate regime
What is the term for a country's total value of goods and services produced in a given year? Gross Domestic Product (GDP)
What is the term for a country's total value of goods and services produced in a given year, minus the cost of imported goods? Gross National Product (GNP)
What is the term for a country's total value of all goods and services produced in a given year, adjusted for inflation? Real GDP
What is the term for the economic theory that suggests that countries should specialize in the production of goods and services in which they have a comparative advantage? Comparative advantage theory
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