Econ 11 Fourth Exam Outline

I. Chapter 18 - International Trade

A. The Nature of International Trade

B. Comparative Advantage among Nations

1. Absolute Advantage vs Comparative Advantage

2. Opportunity Cost and Comparative Advantage

3. Gains from Comparative Advantage

C. Graphical Analysis of Comparative Advantage

D. Autarky versus international trading

E. Protectionism

1. Tariffs and Quotas (surplus and deadweight loss)

II. Chapter 25 - Economic Growth

A. Four wheels of Economic Growth

1. Human Resource, Natural Resource, Capital, and Technological Change

B. Theories of Economic Growth

1. Classical Dynamics of Smith and Malthus

2. Economic Growth with Capital Accumulation: The Neoclassical Growth

3. The New Growth Theory (Growth Accounting)

III. Chapter 26 - Challenge of Economic Development

A. Four elements of Economics Development

B. Characteristics of a Developing Country

C. Vicious Cycle of Poverty

D. Poverty Trap

IV. Chapter 27 - Exchange Rates and the International Financial System

A. Balance of International Payments

1. Current Accounts (what are the components?)

a) Debit/Outflow

b) Credit/Inflow

2. Financial Accounts (what are the components?)

a) Debit/Outflow

b) Credit/Inflow

B. Determination of Foreign Exchange Rates

1. Demand for domestic and foreign currencies

2. Supply for domestic and foreign currencies

3. Other factors affecting Exchange rates

C. International Monetary System

1. Fixed Exchange Rates

2. Flexible Exchange Rates

3. Managed Exchange Rates

D. Purchasing Power Parity and Exchange Rates

E. Monetary Policy on Exchange Rates

V. Chapter 28 Open Economy Macroeconomics

A. Marginal Propensity to Import

B. Transmission Mechanism in an Open Economy

C. Relationship between Net Exports, Savings, and Investments