What is international economics?
Q: What is international economics?
A: International economics is a field of macroeconomics that looks at the effect of trade of goods and services between different countries.
Q: Why do countries engage in trade with each other?
A: Generally, countries engage in trade with each other if certain goods or services are legal but not available in one country, the costs of production are different in different countries, or a country has a comparative advantage in producing certain goods.
Q: What is an example of a good that may be legal but not available in a country?
A: An example of a good that may be legal but not available in a country is bananas not being grown in Germany, and therefore needing to be imported.
Q: Why might it be better for a country to produce something in one country and export it to another country?
A: It may be better for a country to produce something in one country and export it to another country if the costs of production are more favorable in the first country.
Q: What is a comparative advantage?
A: A comparative advantage is when a country has a lower opportunity cost in producing a certain good or service compared to another country.
Q: What is the end goal of countries engaging in specialization and trade?
A: The end goal of countries engaging in specialization and trade is for both countries and their economies to be better off.
Q: How does international economics relate to macroeconomics?
A: International economics is a field of macroeconomics that focuses specifically on the impact of trade and other economic activities between different countries.
