DIŞ TİCARET - Deneme Sınavı - 11

The discipline of international economics is composed of two main parts: International trade and international money. International trade refers to the real side of international economics while international money refers to the monetary side of international economics. Barter, on the other hand, refers to an exchange of a commodity for another.

Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Thus, balance of trade gives the difference between total imports and total exports. If total imports are more than the total exports within an economy, then there is a trade deficit.

Increase in the terms of trade is referred to an improvement in the terms of trade.

Foreign exchange rate: International trade as well as international investments entail currency of the foreign country which is dealt with. The exchange of national currency with foreign currencies is done at the foreign exchange market

Revaluation: Raising the value of the national currency by the decision of the Central Bank is referred to revaluation.

Currency depreciation: Due to free floating of foreign exchange rate at foreign exchange rate market, a decrease in the value of the national currency compared to a foreign currency refers to currency depreciation.

According to the Figure 1.2, exports of manufactured goods constituted the biggest share within the total merchandise exports in 2017 with a percentage of 70.

Digital economy affects the international trade via new instruments. These new instruments have the potential of altering not only the way of trading and the profile of traders but also the commodities being traded. Main instruments of the digital economy which have started to affect the international trade are the Internet of Things, Artificial Intelligence, 3D Printing and Blockchain.

Additive Manufacturing (AD): It refers to technologies that build 3D objects by adding layer-upon-layer materials of different kinds like plastics and metals.

Transports costs, logistic costs and border crossing costs are the costs of delivering the goods from producers to consumers.

Real and Monetary Side of International Economics

The discipline of international economics is composed of two main parts: International trade and international money. International trade refers to the real side of international economics while international money refers to the monetary side of international economics. The analysis on international trade part takes the real transactions into consideration , leaving the money aside. In other words, international trade analysis is based on the physical movement of goods or services. In this respect, we can conjure up a simple system of barter. On the other hand, the international money part deals with the financial transactions like foreign exchange, foreign exchange markets, foreign exchange rate systems, payments among the nations, investment flows, and balance of payments.

Real and Monetary Side of International Economics

When we buy an imported commodity, say a famous brand automobile, we pay the amount in a foreign currency which refers to foreign exchange. When the domestic producer exports its products, he/she will be paid in foreign exchange. In these basic examples, we see monetary transactions as an integral part of international trade. Suppose that the foreign exchange rate increases within an economy. This increase in the foreign exchange rate can lead to an increase in the volume of exports and a decrease in the volume of imports of this nation. This simple example justifies how international monetary transactions affect international trade.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

International trade which constitutes one of the two main parts of international economics has its own key words and concepts. Although they are mostly well-known, it’d be useful to give their precise meanings so as to provide conformity and consistency throughout the chapters. (1) Volume of trade: Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Thus, balance of trade gives the difference between total imports and total exports. If total imports are more than the total exports within an economy, then there is a trade deficit. On the other hand, when total exports exceed total imports, it means that there is a trade surplus.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

International trade which constitutes one of the two main parts of international economics has its own key words and concepts. Although they are mostly well-known, it’d be useful to give their precise meanings so as to provide conformity and consistency throughout the chapters. (1) Volume of trade: Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Thus, balance of trade gives the difference between total imports and total exports. If total imports are more than the total exports within an economy, then there is a trade deficit. On the other hand, when total exports exceed total imports, it means that there is a trade surplus.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

International trade which constitutes one of the two main parts of international economics has its own key words and concepts. Although they are mostly well-known, it’d be useful to give their precise meanings so as to provide conformity and consistency throughout the chapters. (1) Volume of trade: Defining the key terms and concepts has to start with the term volume of trade. Volume of trade gives the total amount of imports and exports. Imports are the goods or services that are bought from a foreign country while exports refer to the goods or services that are sold to a foreign country. Thus, balance of trade gives the difference between total imports and total exports. If total imports are more than the total exports within an economy, then there is a trade deficit. On the other hand, when total exports exceed total imports, it means that there is a trade surplus.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE-Terms of trade

Another key term which is used within the scope of international trade is terms of trade. Terms of trade of a nation are found by the ratio of the price index of its exports to the price index of its imports. If this ratio is to be expressed in percentage, it is multiplied by hundred. These terms of trade can also refer to commodity terms of trade or net barter terms of trade.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE-Income terms of trade

Apart from the commodity or net barter terms of trade which is examined above, there are income terms of trade that are mostly used in studies related with economic development. Income terms of trade gives the nation’s export-based capacity to import. In spite of a deterioration in the commodity terms of trade of the nation, an increase in its income terms of trade is a positive sign with respect to its economic development.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE

Positive economies of scale exist when the cost of producing a unit of commodity decreases as its output rate increases.

KEY TERMS AND CONCEPTS OF INTERNATIONAL TRADE-Exchange market

Lowering the value of the national currency by the decision of the Central Bank is called devaluation.

Theory of Absolute Advantage

It is the theory of Adam Smith who has been accepted as the father of the Classical Trade Theory. According to the Theory of Absolute Advantage, both of the trading countries can gain if each of them produces the commodity in which they are more efficient.