No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Fifteen: Issues in International Economics 361 DESIRED LEARNING OBJECTIVES At the conclusion of this chapter, the student should be able to... § § Explain why the benefits of free trade don’t change by the addition of a political border § § Describe how nations benefit from free trade by producing according to their comparative advantage and trading for other goods § § Explain the magnitude and direction of imports and exports to the U.S. economy § § Describe what must occur to a nation’s capital account if it has a current account (trade) deficit § § Differentiate between a “good” and a “bad” trade deficit § § Explain mercantilism as an economic philosophy § § Demonstrate graphically how tariffs increase producer’s surplus at the expense of the consumer’s surplus § § Explain the long-run and short-run drivers of exchange rates § § Describe the law of one price and PPP