Question

Describe the subject matter of International Economics.

Answer 1

Subject Matter of International Economics:
The subject matter of International Economics includes a large number of segments which are classified into the following parts.

1. Pure Theory of Trade:
This component explains the causes for foreign trade, composition, direction and volume of trade, determination of the terms of trade and exchange rate, issues related to the balance of trade, and balance of payments.

2. Policy Issues:
Under this part, policy issues such as free trade vs. protection, methods of regulating trade, capital and technology flows, use of taxation, subsidies and dumping, exchange control and convertibility, foreign aid, external borrowings, and foreign direct investment, measures of correcting disequilibrium in the balance of payments, etc are covered.

3. International Cartels and Trade Blocs:
This part deals with the economic integration in the form of international cartels, customs unions, monetary unions, trade blocs, economic unions, and the like. It also discusses the operation of Multi-National Corporations (MNCs).

4. International Financial and Trade Regulatory Institutions:
Financial institutions like International Monetary Fund IMF, IBRD, WTO, etc which influence international economic transactions and relations shall also be part of international economics.