CAS IR 271 Chapter Notes - Chapter 9: Capital Control, World Trade Organization, Fixed Exchange-Rate System
30 Jul 2018
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Document Summary
Growth in global merchandise trade- after cold war trade took off. Chapter 9: world politics: trade and investment: trade= more important day to day interaction of players in the world. Trade"s growing importance in world economy: rise in globalization after wwi depression steadily growing until 2008, foreign direct investment- business from one country invests in foreign business. Trade terminology: balance of payments amount of money going in and out of country- must be zero, current account balance- difference between total exports and imports: positive= trade surplus & negative= trade deficit. Exchange rates- reflect economic well being of country: fixed exchange rate- rates do not change with response to supply and demand, encourages international trade, prevents currency fluctuations, backing . Creates problems during a recession: floating exchange rate- country will issue currency as it sees fit, prices fluxuate which discourages international trade, accurately reflects country"s economic health, introduces risk and uncertainty.
