Type:
Solution Manual
Resource:
Introduction to International Economics
Edition:
3rd Edition
Author(s):
Dominick Salvatore
Salvatore’s Introduction to International Economics, 3rd Edition
Instructor’s Manual
*CHAPTER 1 (Core Chapter) INTRODUCTION OUTLINE 1.1 We Live in a Global Economy Case Study 1-1 The Dell and Other PCs Sold in the United States Are Anything But American! Case Study 1-2 What Is an “American” Car? 1.2 The Globalization Challenge Case Study 1-3 Is India’s Globalization Harming the United States? 1.3 International Trade and the Nation’s Standard of Living Case Study 1-4 Rising Importance of International Trade to the United States 1.4 The International Flow of Labor and Capital Case Study 1-5 Major Net Exporters and Importers of Capital 1.5 The Subject Matter of International Economics 1.6 Current International Economic Problems 1.7 International Institutions and the World Economy 1.8 Organization of the Text Appendix: International Trade Data, Sources and Information A1.1 International Trade Data A1.2 Sources of Additional International Data and Information
KEY TERMS Globalization Anti-globalization movement Interdependence International trade policy Balance of payments Foreign exchange markets Adjustment in the Balance of Payments
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Microeconomics Macroeconomics Open-economy macroeconomics International finance World Trade Organization (WTO) International Monetary Fund (IMF) United Nations (UN)
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Salvatore’s Introduction to International Economics, 3rd Edition
Instructor’s Manual
LECTURE GUIDE 1. As the first chapter of the book, the general aim here is simply to define the field of study of international economics and point out its importance in today's interdependent world. 2. The material in this chapter can be covered in three classes. I would utilize one class to cover Sections 1-2 and the second class for Sections 3-5. I would spend most of the third class on Section 6 to identify the major current international economic problems facing the United States and the world and to show how international economics can suggest ways to solve them. This should greatly enhance students' motivation.
ANSWERS TO REVIEW QUESTIONS AND PROBLEMS 1. Globalization refers to the openness and the free exchange of goods, services, resources, technologies, moneys, and ideas around the world. The advantages of globalization are that it increases efficiency in production and leads to higher income for the nation’s workers. Globalization often also makes available a greater range of cheaper and or better products to the nation’s consumers, and provides opportunities for higher returns a greater risk diversification to the nation’s investors. The disadvantages of globalization is that it often leads to job losses and lower wages for low-skilled labor in advanced nations and harm (i.e., it is a “brain drain” for) the nations of emigration. Financial globalization and unrestricted capital flows can also lead international financial crises. It is these disadvantages and negative aspects of globalization have given rise to a strong anti-globalization movement, which blames globalization for sacrificing human and environmental well-being to the corporate profits of multinationals. 2. International economic relations differ from interregional (i.e. within a country) economic relations in that nations usually impose some restrictions on the flow of goods, services, and factors across their borders, but not interregionally or internally (i.e., not across regions of the same nation). In addition, international flows are to some extent hampered by differences in language, customs, and laws. Furthermore, international flows of goods, services, and resources give rise to payments and receipts in foreign currencies, which change in value over time. 3. A rough measure of the economic relationship among nations, or their interdependence, is given by the ratio of their imports and exports of goods and services to their gross domestic product (GDP). The imports and exports as a percentage of GDP are much larger for small industrial and developing countries than they are for large countries. 4. The United States relies less on international trade for its high standard of living than most other nations because it is continental in size with immense natural and human resources. As such, it can produce with relative efficiency most of the products it needs. Contrast this to the position of a small nation, such as Switzerland, which can specialize and export only a small range of commodities and imports all the others. In general, the larger the nation the smaller .
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