International Economics: Trade and Money
The economics of the international economy can be divided into two broad subfields:
the study of international trade and the study of international money. International
trade analysis focuses primarily on the real transactions in the international economy,
that is, on those transactions that involve a physical movement of goods or a tangible
commitment of economic resources. International monetary analysis focuses on the
monetary side of the international economy, that is, on financial transactions such as
foreign purchases of U.S. dollars. An example of an international trade issue is the
conflict between the United States and Europe over Europe’s subsidized exports of
agricultural products; an example of an international monetary issue is the dispute over
whether the foreign exchange value of the dollar should be allowed to float freely or be
stabilized by government action.
In the real world there is no simple dividing line between trade and monetary issues.
Most international trade involves monetary transactions, while, as the examples in this
chapter already suggest, many monetary events have important consequences for trade.
Nonetheless, the distinction between international trade and international money is useful.
The first half of this book covers international trade issues. Part One (Chapters 2 through 8)
develops the analytical theory of international trade, and Part Two (Chapters 9 through 12)
applies trade theory to the analysis of government policies toward trade. The second half of
the book is devoted to international monetary issues. Part Three (Chapters 13 through 18)
develops international monetary theory, and Part Four (Chapters 19 through 22) applies this
analysis to international monetary policy.
MYECONLAB CAN HELP YOU GET A BETTER GRADE
If your exam were tomorrow, would you be ready? For each chapter,
MyEconLab Practice Tests and Study Plans pinpoint which sections you have
mastered and which ones you need to study. That way, you are more efficient
with your study time, and you are better prepared for your exams.
Here’s how it works:
1. Register and log in at www.myeconlab.com/krugman
2. Click on “Take a Test” and select Sample Test A for this chapter.
3. Take the Diagnostic Test. MyEconLab will grade it automatically and create a
personalized Study Plan so you see which sections of the chapter you should
study further.
4. The Study Plan will serve up additional Practice Problems and tutorials to help
you master the specific areas where you need to focus. By practicing online,
you can track your progress in the Study Plan.
5. After you have mastered the Sections, go to “Take a Test” and select Sample
Test B for this chapter. Take the test and see how you do!
The economics of the international economy can be divided into two broad subfields:
the study of international trade and the study of international money. International
trade analysis focuses primarily on the real transactions in the international economy,
that is, on those transactions that involve a physical movement of goods or a tangible
commitment of economic resources. International monetary analysis focuses on the
monetary side of the international economy, that is, on financial transactions such as
foreign purchases of U.S. dollars. An example of an international trade issue is the
conflict between the United States and Europe over Europe’s subsidized exports of
agricultural products; an example of an international monetary issue is the dispute over
whether the foreign exchange value of the dollar should be allowed to float freely or be
stabilized by government action.
In the real world there is no simple dividing line between trade and monetary issues.
Most international trade involves monetary transactions, while, as the examples in this
chapter already suggest, many monetary events have important consequences for trade.
Nonetheless, the distinction between international trade and international money is useful.
The first half of this book covers international trade issues. Part One (Chapters 2 through 8)
develops the analytical theory of international trade, and Part Two (Chapters 9 through 12)
applies trade theory to the analysis of government policies toward trade. The second half of
the book is devoted to international monetary issues. Part Three (Chapters 13 through 18)
develops international monetary theory, and Part Four (Chapters 19 through 22) applies this
analysis to international monetary policy.
MYECONLAB CAN HELP YOU GET A BETTER GRADE
If your exam were tomorrow, would you be ready? For each chapter,
MyEconLab Practice Tests and Study Plans pinpoint which sections you have
mastered and which ones you need to study. That way, you are more efficient
with your study time, and you are better prepared for your exams.
Here’s how it works:
1. Register and log in at www.myeconlab.com/krugman
2. Click on “Take a Test” and select Sample Test A for this chapter.
3. Take the Diagnostic Test. MyEconLab will grade it automatically and create a
personalized Study Plan so you see which sections of the chapter you should
study further.
4. The Study Plan will serve up additional Practice Problems and tutorials to help
you master the specific areas where you need to focus. By practicing online,
you can track your progress in the Study Plan.
5. After you have mastered the Sections, go to “Take a Test” and select Sample
Test B for this chapter. Take the test and see how you do!
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