Core-024 International Trade
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About Core-024 International Trade
About the Teacher
Jay Moulton
Jay Moulton is a business veteran. In short:
- Corporate finance and turnaround expert in U.S. and Canada
- CEO or operator of numerous companies in many industries
- 30 years of actually applying business economics principles
- Successfully led and invested in several leveraged buyouts
- Director or advisor to 30+ different companies
- Experience in both for-profit and not-for-profit sectors
- Producer of 700 professional videos and several TV shows
- Author of six economics and business strategy books
- Graduate of Harvard Business School MBA program
- Graduate of The Royal Military College of Canada
- Professional electrical engineer
- Governor of the Harvard Club of British Columbia
International Trade
MODULE 1
If we allow nations to specialize, nations produce the goods that they produce most efficiently, then trade with each other so that all nations realize the most from their resources. Free trade and voluntary exchange between individuals and across countries can be a win-win situation.
Comparative Advantage and International Trade
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This video explains the concept of comparative advantage as the basis of international trade and differentiates it from absolute advantage. We study two individuals and two activities, where one individual has an absolute advantage in both the activities, but a comparative advantage in one.
Although he can mow his lawn faster than Professor Brock, Tiger Woods can make more money if he plays golf instead of mowing his lawn.
Benefits of Trade
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Using the example of Michigan's Upper Peninsula and Japan, Tawni Ferrarini compares the production possibilities of these two geographic regions.
The production possibility frontier allows you to see all the possibilities for production. This video compares the production of apples to the production of iron ore in the Upper Peninsula of Michigan.
In this example of international trade, the U.S. and Canada trade two goods, corn and petroleum. The U.S. has a comparative advantage producing corn, and Canada has a comparative advantage producing petroleum. The two countries gain from trade and there is a rise in total production.
In this video, we use two products, corn and petroleum, produced by two countries, the U.S. and Canada. The U.S. has a comparative advantage in corn production while Canada has a comparative advantage in petroleum production.
An autarky exists when a nation chooses to function without international trade. China did so in the 1950s and North Korea currently operates this way. However, nations that do engage in trade are able to benefit from the efficiencies of other countries.
Currency Exchange Rates
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How is money valued in international markets? In this video, we explore exchange rates and how international currencies are valued in relation to the U.S. dollar.
In this video, the supply curve of British pounds will slope upwards because, as the exchange rate rises, there are more dollars per pound and there will be a higher supply of British pounds.
Once there is an equilibrium between supply and demand, various factors can shift the curves, and change the currency exchange rate in international markets.
How does government spending affect exchange rates?
When a foreign exchange rate is fixed, international forces continue to change. As a result, currency supply and demand curves continue to shift, but, instead of finding a natural equilibrium exchange rate, fixed exchange rates cause market disequilibrium.
This assessment will test your knowledge of Public Goods.
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