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International Trade

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cmarquardt94's version from 2016-09-16 23:19

Section 1

Question Answer
Internationl Economics can be divided into two broad sub fields...international trade & international Money
Transactions that involve the physical movement of goods or a tangible commitment of resources are the domain of international trade analysis
international trade analysis focuses on...REAL transactions in the international economy (physical movement of goods)
international monetary analysisfocuses on monetary side, things like transactions such as foreign purchases of US dollars
Gravity model equation does what...predicts the Volume of trade between any two countries
What 3 things does the Gravity Model Equation say determines the volume of trade between 2 countries1) the size of the 2 countries GDP 2) the distance between the countries 3)trade is proportional to the product of the two GDP's
why does the gravity model work?large economies spend large amounts on imports because they have large incomes & also because they attract many other countries money because they have a wide range of products
reasons why the Gravity Model is useful:looking for Anomolies, Impediments to Trade(Distance, Barriers, and Borders)
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Section 2

Question Answer
which type of goods dominate World Trade?Manufactured
service Offshoringwhen a service previously done within a country is shifted to a foreign location
besides the size of an economy, what other 2 things does the gravity model say relates to the amount of trade between 2 countries?Distance AND international borders DISCOURAGE trade
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