HND_Economics_2_The_World_Economy世界经济学报告[1]

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经济学报告

A Report Submitted to Wuhan Universityof Technology for the Degree of HND with Financial Services Economics 2: The World EconomyClass: F0804Name: Shao YuqingID: 095908332School of International EducationWuhan University of TechnologyWuhan 430070 P. R. China◇Title: Global Economy◇Abstract:This report mainly represents the development about free trade and economical globalization. It discussed about the basic theories about free trade; economic integration regional and global; balance of payment; single currency; LDCs; MNCs. ◇Keywords:Free tradeEconomic integrationTrading blocsGreen barrierⅠIntroductionAlong with 2008 economic crisis,Global unification of financial markets, which preceded formal global economic unification, raised an issue of the global regulation of the markets. At the same time, this seems impossible without global supranational bodies being in place.This is a dilemma posed in discussions in the main international panels of the world (G8; G20; UN General Assembly): economic integration is both pushed by world economic development and stopped at the political level, including cultural differences between states (e.g., Iran and Israel).However the trend of development is inevitable and back to the original of initial purpose to trade, we will find answer.Ⅱ Free Trade vs. Global Economical DevelopmentA s the scarcity and geographical diversity of resources, trading meets the demand of exchanging necessities and commodities. Nowadays, trading is described as ―global‖, it seems we can enjoy the goods and service trading freely allover the world that can be delivered.·But is it true ?·What make us not?·How long should it take to finally make it?As to find out the answer, the questions had been discussed from three parts:◆Free Trade &International TradeFree trade is essentially a liberal approach to international business. Economic policy-makers implement a trade structure in which goods and products are imported and exported without government intervention..[1]F ree trade is based on the principal of eliminating barriers for exchange and North American Free Trade Agreement create a trade free area.Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008. [2]B ut that is a idealized situation when we discussed about completely trading freely it means there is no barrier and restriction of import or export, it is rarely can be found.I n the real world, as the level of industrialization and technology development divers, when one country can produce a good and service much more efficiently than other countries as using the same resources, this country is said to have an Absolute Advantage.Individual country can benefit a lot from international trades:·Specialization pushes up output and decrease the cost of goods.·Consumers get more choice and cheaper goods and service and living standard increase.·Promotes competition. Domestic company will face the challenges from multi- national companies, it also a chance for them to obtain benefits abroad.G lobal trading markets interact with each other, exchanging products grown or made with a Comparative Advantage. Free trade encourages countries to specialize their economies in order to trade certain goods for maximum benefits with other countries. And comparative advantage is the basis of International trade.This happens as the opportunity costs of exchanging resources will be higher in the country with absolute advantage than it will be in the country with comparative advantage.Example:Suppose there two countries, A and B, that both produce food and clothes. Each country has a unit of resources and both countries use their resources to food production, output will be:·Country A:1000 t·Country B:4000 tIf all the resources use to clothes production, output will be:·Country A:1000 t·Country B:2000 tTo show different opportunity costs, consider the countries produce and sells only domestics’:It is clearly that Country B has an absolute advantage in both commodities, for using same resources Country A it can make twice as many clothes and advantage at food is 4.The domestic opportunity cost ratios.For Country A, the cost of 1 food is 1 clothes.For Country B, the cost of 1 food is 0.5 of clothes, the cost of 1 clothes is 2 food.It show the opportunity cost of clothes is cheaper in Country A than Country B.Country A has a comparative advantage in clothes. So A will produce clothes and B will produce food. And only partially specializing that Country B to fulfill the reduction of clothes.And the total output of clothes is remaining the same but total food producing is increase.◆Free trade &Regional economic integrationF ree trade agreements allow for goods to be imported and exported without taxes and tariffs, making products more affordable for buyers and sellers. Other barriers to international trade such as quotas on imports or subsidies for producers are also eliminated.T here are some reasons why trade is not fully free:·Countries raise barriers as they may fear being swamped by the larger and more powerful neighbor.·Countries want to protect industries as ―Sunrise‖, ―Su nset‖ and―Strategic‖. ·Raise revenue by means of imposing taxes on imports.·Protecting employment in domestic industries and try to move expenditure from foreign to domestic product.·Balance of payment deficit.All above reasons will cause restrictions or barriers to the international trade, that applied to free trade is called as protectionism.* EU subsides on agriculture.EU agricultural policy is constantly evolving. 50 years ago, the emphasis was on providing enough food for a Europe emerging from a decade of war-induced shortages. Subsidizing production on a large scale and buying up surpluses in the interests of food security are now largely a thing of the past. EU policy aims to enable producers of all forms of food - from crops and livestock to fruit and vegetables or wine - to survive by themselves in EU and world markets.T he policy reforms have also been in the interest of fairer world trade. They have reduced the risk that EU subsidies for exports of surplus production will distort world markets. In the so-called Doha Round of international trade liberalization talks, the EU has proposed eliminating export subsidies altogether by 2013, even if the talks fail.[3]T he major forms of barriers to the trade that protection might taken are tariffs and non-tariffs which includes taxes placed on foreign goods; quota about physical limitation on quantity; embargoes during special period; exchange control mostly for currency; subsides for protecting special industries.As recently the trade protectionism, having reemerged under the mask of‖ green barrier‖, is making a great impact on the slowly recovering world economy and trade.But*China's agricultural exports are being stifled by "green barriers" -- import restrictions on the grounds of environmental and food safety issues -- but Chinese farmers are now fighting back with "green" produce.China's tea exports to the European Union dropped by 37 percent last year on an annual basis, which was principally attributed to intensified import criteria -- examination categories soared from six to 62 after November last year. According to figures from United Nations organizations, 7.4 billion U.S. dollars of exports from China covering agriculture and other industries were stifled by the growing green barrier annually.In an effort to deal with the difficulties, China has taken up the challenge to improve its own agricultural structure. "China has pinpointed green food as a vanguard to break the barrier and boost agricultural exports. The development can also greatly improve the agricultural environment," said Liang Zhichao, of the China Green Food Development Center (CGFD). In northeast Heilongjiang Province, China's largest green food exporter, 40 percent of farmers' income growth was realized by developing green food. [4]Due to stimulate trade between and obtain other benefits of economic cooperation, countries that joined together reached kinds of intergovernmental agreement, Trade Bloc. Majority members are part of a regional intergovernmental organizationDepending on the level of Economic Integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.[5]Some supporters of worldwide free trade are generally opposed to trading blocs, which, they argue, encourage regional as opposed to global free trade. But it remains observed whether regional economic integration is blocking the process ofglobalization or alternative.T rade blocs can be stand-alone agreements between several states (such as the North American Free Trade Agreement (NAFTA) or part of a regional organization (such as the European Union).EU&Trade Free:The fundamental principles of the EU is the free movement of people, goods, services, and capital, enacts legislation in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development.The found of EU is significant for European economic integration and the members benefit not only from domestic but also global.The European Union's Internal Market (sometimes known as the Single Market, formerly the Common Market) seeks to guarantee the free movement of goods, capital, services, and people within the EU's 27 member states (single market).The Internal Market allows not only for the free movement of goods amongst member states, also the free movement of the factors of production. It is intended to be conducive to increased competition, increased specialisation, larger economies of scale, allows goods and factors of production to move to the area where they are most valued, thus improving the efficiency of the allocation of resources.[6]The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the euro zone. It is also intended as a political symbol of integration and stimulus for more. Since its launch the euro has become the second reserve currency in the world with a quarter of foreign exchanges reserves being in euro. The euro, and the monetary policies of those who have adopted it in agreement with the EU, is under the control of the European Central Bank (ECB).∙The Union acts as single player in Foreign Trade and supports the principles of free and fair international trade. As it negotiates with one voice, it can exercise real influence. Together, the European Union's 27 members account for 19% of world imports and exports. Since its technical norms are widely used throughout the world, it often sets the terms of the debate.[7]◆Free Trade & Economic Globalization“Only a free global market and a free global trading system can cope with the global challenges of our time,” said Mr. Renato Ruggiero, WTO Director-General, today (24 April) in Singapore at the World Trade Congress, sponsored by Singapore's Trade and Development Board and the International Herald Tribune. [8]The World Trade Organization (WTO) is established to regulate world trade and covers goods, services and intellectual property rights. It aims to lowering trade restrictions and to settle disputes with a certain procedure.∙Increase income.The WTO’s own estimates for the impact of the 1994 Uruguay Round trade deal were between $109 billion and $510 billion added to world income (depending on the assumptions of the calculations and allowing for margins of error).More recent research has produced similar figures. Economists estimate that cutting trade barriers in agriculture, manufacturing and services by one third would boost the world economy by $613 billion — equivalent to adding an economy the size of Canada to the world economy. In Europe, the EU Commission calculates that over 1989–93 EU incomes increased by 1.1–1.5% more than they would have done without the Single Market. [9]∙ Settle DisputeIndia etc versus US: ‘shrimp-turtle’ a case brought by India, Malaysia, Pakistan and Thailand against the US. The appellate and panel reports were adopted in 1998. [10] This case is significant as a landmark about settle the conflicts between economical developing and environmental protection.The US lost the case, not because it sought to protect the environment but because it discriminated between WTO members. It provided countries in the western hemisphere —mainly in the Caribbean —technical and financial assistance and longer transition periods for their fishermen to start using turtle-excluder devices. It did not give the same advantages, however, to the four Asian countries (India, Malaysia, Pakistan and Thailand) that filed the complaint with the WTO.After the first time the US failed case, the non-governmental organization especially environment protecting organizations respond strongly against the settlement and appeal proposals, but WTO panels reject the recommendation. The ruling also said WTO panels may accept ―amicus briefs‖ (frien ds of the court submissions) from NGOs or other interested parties.The WTO contributes to protection and preservation of the environment through its objective of trade openness, through its rules and enforcement mechanism, through work in different WTO bodies, and through ongoing efforts under the Doha Development Agenda. The Doha Agenda includes specific negotiations on trade and environment and some tasks assigned to the regular Trade and Environment Committee. [11]◆The UK Balance of PaymentThe UK Balance of Payments is a account of all the economic transactions between the UK and the world. These transactions includes: exports and imports of goods& service; income& financial inflows; transfers.And includes four sections: The Current Account; The Capital Account; The Financial Account; The International Investment Position.Here is a summary of balance of payments in 2009:[12]◆Current AccountCurrent account concerns on income and expenditure and includes four categories: Trade in Goods; Trade in Service; Income; Current Transfer.In 2006 the UK current account deficit suffers a peak at ￡44.9 billion in 2006 and for last four years there has been a reduction in deficit. In 2009, it stands at ￡15.5billion equivalent to -1.1% of GDP.[12]∙The deficit settled into the range of ￡11 billion to ￡14 billion in the period 1992-1997. In 2008, there is a recorded deficit of ￡93.1 billion.[12]∙ Since 1966, every year that been recorded for trade in service has been a surplus but there was a decrease between 2008 and 2009 from ￡55.4 billion to ￡49.9 billion.[12]∙ Since 2000, the balance of income has been in surplus for all years. From 2007, the surplus suffers a deduction as a reduction in net earnings deficit on other investment.[12]∙ Between 1990 and 2000, the deficit for current transfer doubled from￡4.8 billion to ￡9.8 billion. As the currency investment abroad is larger than investment domestic.[12]◆Exchange Rate& Balance of Payment[13]From the chart, UK is using direct quotation as 1 GBP can buy 1.6432 USD. GBP is at a high exchange rate. Japan using indirect quotation as 1 USD can buy 96.57 JPY.JPY is at a low exchange rate.∙A High Exchange Rate, the GBP is at a high value, means that all areas that are interest bearing will benefit and the Balance of Payment will have a positive impact. Import will become cheaper. Consumers could be import goods easier. Foreign investment will increase as profits sent back worth more than domestic currency However it will cause problem in the Balance of Goods& Service areas as domestic firms may reduce price. The strength of the UK pound makes their product expensive to potential foreign buyers whom will consider buying same commodity elsewhere.∙A low exchange rate, the JPY is at a low value, mean Japan’s goods and service will be cheaper both in foreign and domestic markets which will result an in crease indemand and the domestic firms can benefits more. It means an improvement in Trade in Goods.And it will encourage Japanese companies invest abroad in that the foreign currencye.g. GBP earned will be worth more when sent back Japan.◆Singer CurrencyAs the EMU, EURO can be paid in any countries which are a member of it, but UK pound is not one of them. Here some pros and cons:∙The single currency reduces the cost, Euro countries’ individual or forms did not have to do transaction and reduce exchange rate uncertainty.Increase foreign investment free movement of capital and goods among internal market.∙If UK joins in the EMU, it will lose independent from both monetary policy and policy instrument. And changes from GBP to Euro may be costly as equipment and staff train.And single currency will have effects on both individuals and enterprises:∙Euro areas citizens will benefit a lot from single currency, as reduce the cost of transaction. It will be more convenient since there is no exchange rate uncertainty and price can be easier to compare between countries.∙For enterprise that wants to invest in Euro areas, the risk is decrease since there is no exchange rate flotation. Both competition and chances is increase as the free movement of capital and goods.◆LDCLess developed countries are now facing the problems as Underdevelopment Trap which means and affectless support from western countries. Development Strategies and Models do not overcome the poverty difficulties that LDCs are facing.And here is the feature of Ethiopia which is the poorest country all over the world and compared with China and America.[14][15]◆MNCAs the development of free trade and the trend of economic globalization, some adventurers broaden their eyesight to foreign market or even global market and Multi-National Firms becoming popular. MNFs are those enterprises that operate not only in one country but also seek out opportunity spread abroad such as Ford, IBM and KFC.It brought both benefits and problems to the host countries. As the case of KFC to China, in the year 2000 the direct contribution made by KFC shows that:∙KFC invested directly 2740 million for the upper stream and low stream sectors and a large quantity of initial demands had been created.∙KFC offered 420 million RMB tax for Chinese government and turned in 325 million RMB taxes for Chinese government indirectly. Plus the direct taxes altogether KFC created 745 million RMB tax revenues for Chinese government.∙ KFC provided job opportunities for 5201 formal workers and 24060 casual laborers. ∙ In 2000, the initial paid-in capital made by KFC brought 520 million RMB capital formations to China which as 50 times more than that in 1992.ⅢConclusionEconomic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state. This is meant in turn to lead to lower prices for distributors and consumers (as no customs duties are paid within the integrated area) and the goal is to increase trade.The trade stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist. [16]Reference:[1] /about_5373021_trade.html?ref=Track2&utm_source=ask[2] /itp/Policy/NAFTA/nafta.asp[3] http://europa.eu/pol/agr/index_en.htm[4] /200203/31/eng20020331_93199.shtml[5] /wiki/Trade_bloc[6] /wiki/Four_Freedoms_(European_Union)[7] http://eeas.europa.eu/what_we_do/index_en.htm[8] /english/news_e/pres96_e/pr046_e.htm[9] /english/thewto_e/whatis_e/10ben_e/10b06_e.htm[10] /english/tratop_e/envir_e/edis08_e.htm[11] /english/tratop_e/envir_e/envir_e.htm#events[12] /statbase/product.asp?vlnk=1140[13] /show.php?contentid=28[14] /ethiopia/gdp_real_growth_rate.html[15] /wiki/Ethiopia#cite_note-imf2-3[16] /wiki/Economic_integration。

世界经济概论

World Trade, 1968-1997
6000 5000
$US Billions
4000 3000 2000 1000 0 1968 1973 1978 1983 1988 1993
World Trade Growth
Growth of World Output and Trade
15.0 10.0
WTO: Promotion of Trade Liberalization
• WTO: World Trade Organization: Established in 1994
– An International Organization Charged with:
• Monitoring Compliance with rules (including GATT) • Resolving Trade Disputes • Facilitating Trade Negotiations
Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
world trade 0.9 13.1 15.1 10.4 3. 6 9.6 2.0 5.6 -1.2 12.2 15.0 2.8 3.2 0. 7 2.0 5.5
(% value)
• • • • • • • • France Germany Italy Japan Holland Sweden Britain USA 1913 21 20 18 30 5 20 – 21 1950 18 26 25 – 11 9 23 18 1990 5.9 5.9 5.9 5.3 5.9 4.4 5.9 5.9 2000 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9

世界经济学

A SURVEY OF WORLD ECONOMYIntroductionWhat is WORLD ECONOMY?WORLD ECONOMY refers to the entirety of all the national economies which are linked together with different economic links.What is WORLD ECONOMICS?WORLD ECONOMICS is a branch of ECONOMICS which studies the WORLD ECONOMY.The start of the study:at the end of 1970sIn 1980---China World Economy AcademyThe source of this branch of study:a branch --- Economicsbackground and necessary conditions : International division of labour →international trade →the world market →the world economy.The objects of the branch of study: the international relations of production.1. to study the national economies of the countries in the world, which are parts of the world economy2. to study the international economic relations.mechanism links the national economies togetherdifferent economic linksinternational division of labourgoodsservicecapitaltransfer of technology.3. to study the world economy as a whole.the laws of the changes and development of the world economyworld economy studies the system of economic developmenthuman beings--- the principal part of the systemthe environment and the resources of the earth --- the base for the systemChapter OneScientific Revolution and the World Economy1.the development of productive forces : the scientific and technological revolutions in thehistory of human beings; the significance and impact of the revolutions2.the formation and development of the world economy as a result of the scientific andtechnological revolutionsbibliography:1.Basic Economics, Hailstones & Mastrianna, 9th edition, South-Western Publishing Co. ,Cincinnati, Ohio, 19922.Economics Today, roger Leroy Miller, 9th edition, Adisson-Wesley Education EducationalPublishes Inc., 19973.《世界经济学》张伯里主编中共中央党校出版社2004年7月第1版4.《当代世界经济》王广信赵丽娜主编人民出版社2002年3月第1版5.《世界经济新论》庄起善主编复旦大学出版社2004年8月第1版6.《世界经济概论》池元吉主编高等教育出版社2003年8月第1版I. the development of the Productive Forces and the Formation of the World Economy1. the influence of the Renaissance and of the Discovery of the new continentthe primitive economic system--- low productive forces--- no world economyRenaissance liberated peoplethe beginning of the Renaissance---Dante’s Commedia (14th century)Renaissance: the intermediate between the Middle Ages and the modern times;the beginning of capitalist cultural ideasthe product of the new, rising capitalist relations of productionideological feature: humanism,the enlightenment: in 18th centuryIn 1492, Columbus discovered the new continent.the new sea routeEuropean ports ---international trade centers: London, Antwerp, Lisbona solid base for the big jump of the economy.2. the impact of the first scientific and technological revolution on the world economyIn 18th century, the first scientific and technological revolutionsteam engine --- work continuouslymachine makes machinesmore products for the marketsteam boat and steam engine train --- revolution in the transport industrythe capitalist mode of productionIndustry was totally separated from farming.object of the capitalist mode of production: profit-pursuingmarkets--- raw materialsthe world market--- the world economy3. the impact of the second scientific and technological revolution on the world ecnomy Time: in the 19th centuryGermany and the United States : the heroesElectricity : a new kind of powerOther things: radio, cable, telephone, internal combustion engine, new skills for steel-making, new technology in chemical industry →heavy industryautomobile industry --- the oil industryThe second scientific and technological revolution started in heavy industryIndustry →the most import section in the national economies.More industrialized countriesimport raw materials and export finished productsfarming countries export agricultural products and other raw materials, import industry goodsthe international division of labour developed furtherScience and technology acted and reacted on each other.the study on the basic theories and the scientific research worknew inventions: new communication methods, big steel-made boat, cars and trucks, and even airplanetransport (more quick, safe, convenient and cheep) →international exchange of goods →the world market →the system of the international division of labour →more efficient production →the world market (for raw materials and finished goods )→closer relation of the countries tied together by the world market4. the formation and development of the world economya)The development and formation of the world economy was a result of the scientific andtechnological revolutionsb)The system of international division of labourThe economic ties between the suzerain states and its colonies or between the advanced industry countries and the countries producing raw materials became more strengthened. a world market formed.c)the industry capital --- the banking capital →financial capital →financial oligarch →the export of capitald)the international monetary system establisheda world currency or currenciesgold and silver acted as the world currenciesthe gold standard was establishedThe gold standard had 3 featuresFirst: It established a system of fixed exchange rate between participating countries. Stable exchange rates were considered a necessary ingredient to increase trade among nations. Second: the gold standard limited the rate of growth in a country‘s mone y supply. This was due to the fact that all ―money‖ had to be backed by gold, and the supply of gold in the world increased slowly during this period of time in history.Third: Gold served as an automatic adjustment tool for countries experiencing balance of payments problems. If a country was running a balance of payments deficit, gold would, by market forces, flow out of the country, decreasing economic activity and pushing the balance of payments back toward balance.II. the third scientific and technological revolution caused great improvement in productive forces1.The factors which caused the third scientific and technological revolutiona.the development of science and technologyb.the motivation of capital for profitsc.the government‘s support for the scientific researchd.cold war made the west and the east compete for the military equipments2. the impact of third scientific and technological revolutiontime: started at the end of 1940splace: from the US --- the former Soviet Union, Japan, and the west Europe and then the other countries.Peak: at the end of 1960s.symbols : nuclear power, computer and space technologyNew power,new materials and electronic technology made the third revolution much more remarkable than the first two ones.nuclear power --- the shortage of energy and resources --- supports quicker development of the science, technology and the production.Man-made new materialscomplex materials --- in the aviation or space technology, now even in car industry.Plastic--- used in many placesComputer totally changes our life.computer to operate machinethe improvement of the international division of labour --- the vertical one and the horizontal onethe specialization of the multinational corporations (MNCs)the global operative strategies : the international arrangement for the R&D projects, production and marketing, the flow of capital and so on.the reproduction cycle →international : production→distribution →exchange and consume --- internationalthe factors of production →international: capital, technology, raw materials and labour →international.The internationalization of production may push the productive forces to rise to a new level.Conclusion:division of labour →rise of productive forces →efficiency of the production →frequency of exchange of goods →the early system of the capitalist international division of labour ---the first scientific and technological revolution→the world market, the world currency, the system of the capitalist international division of labour →the beginning of world economy the second scientific and technological revolution→the improvement of the system of the capitalist international division of labour (early stage of internationalization of production) →the world market →(barriers to trade and surplus of capital →the export of capital) →international monetary system→world economyThen the world economy finally established.the third scientific and technological revolution→the (mature) system of the capitalist international division of labour (internationalization of production) →the world market →world economyThree steps for world economy: goods (international) (or the internationalization of goods)→capital(international) (or the internationalization of capitals) →production(international, after the 3rd scientific and technological revolution) (or the internationalization of production)Now the world economy becomes so important that almost every country is involved in it and has its own roles in it. Of course, some countries have more important roles in it. Others may have less important roles in it.III. the intenerating of the capitalist industry structurethe reproduction cycle --- the comparative decreasing input ---the comparative increasing inputlabour-intensive and resources-intensive industries →knowledge-intensive and technology-intensive industries.There are two kinds of intenerating of the industry:1.Intensive intenerating : within one industry, the input of manual labour decreases, but theinput for R&D, information service and so on increase.2.Extensive intenerating : sections which may provide other sections with services ofinformation and knowledge appear to be more important.IV. the trends and laws of the scientific and technological revolution.1.the trends:the changes become quicker and quickerthe result of the changes provides a base for a new revolution.2.the laws:1)the progress of science and technology becomes quickere.g. steam engine: from research to putting into production--- 100 yearstelephone---56 yearsradio---35 yearsairplane---14 yearstelevision---12 yearstransistor--- 5 yearssolar cell--- 2 years2)the leading industries:The time for the exchange of the leading industries becomes shorter.3)the change of scientific structure:Scientific structure:a)people (their number, their age, and their level)b)their specialization (the basic theory, applying theory, natural science, social science,hardware, and software etc. )c)the lab and the equipments and so ond)the information resources and education levelThe scientific structure is always in a dynamic state.Questions:1.How do you understand ―the world economy‖?2.How the world economy was formed?3.Please illustrate the impact of the first and the second scientific and technologicalrevolution on the formation of the world economy.4.Please illustrate the impact of the third scientific and technological revolution on theworld economy.5.How the third scientific and technological revolution promoted the globalization of theeconomy?Chapter TwoThe Productive Forces and the cycle of the world economy1.business cycle2.the economic cycles of the world economy after the World War II the features of the cycles3.the new economy and the cyclebibliography:1.Basic Economics, Hailstones & Mastrianna, 9th edition, South-Western Publishing Co. ,Cincinnati, Ohio, 19922.Economics Today, roger Leroy Miller, 9th edition, Adisson-Wesley Education EducationalPublishes Inc., 19973.Economics, N.Gregory Mankiw, 3rd edition, Tsinghua University Press 20064.《世界经济学》张伯里主编中共中央党校出版社2004年7月第1版5.《当代世界经济》王广信赵丽娜主编人民出版社2002年3月第1版6.《世界经济新论》庄起善主编复旦大学出版社2004年8月第1版7.《世界经济概论》池元吉主编高等教育出版社2003年8月第1版1.business cyclebasic problem for the capitalism--- the development of industry is always interrupted by periodic economic crisis. This makes the economic growth in the capitalist countries unstable.striking feature --- instability, fluctuationsBusiness cycle: the rise and fall of economic activity relative to the economy‘s long-term growth trend. As the cycle progresses, all parts of the economy display marked changes in activity as they move through distinctive periods usually called trough, expansion, peak, and contraction. Production, prices, income, and employment activities all show characteristic changes during the cycle; in fact, no part of the economy is free from this cycle. Extensive studies have shown that these cyclical fluctuations are found in economies throughout the world.1. Real or physical causes :Innovation Theory: the theory that business cycles are caused by breakthroughs in the form of new products, new methods, new machines, or new techniques.Agricultural Theories: theories of the business cycle that relate the general level of business activity to the weather.2. psychological causes:Psychological Theory: the theory that when investors and consumers react according tosome belief about future conditions, their actions tend to transform their outlook into reality.Rational Expectations Theory: an economic theory suggesting that individuals and business act or react according to what they think is going to happen in the future after considering all available information.3. monetary causes:Monetary Theories: theories that the business cycles is caused by the free and easy expansion of the money supply.4. spending and saving causes:Under-consumption Theories: theories that the business cycle is caused by the failure to spend all national income, resulting in unsold goods, reduced total production, and consequent reductions in employment and income.The economy does not distribute enough income among the factors ofproduction to permit purchase of all the goods and services produced bythe economy.The economy does distribute enough purchasing power to buy the totalgoods and services produced but that not all the income or purchasingpower is used.Circular flow of incomeCircular flow of income is the cyclical operation of demand, production, income, and new demand.Income =demand →production →distribution (enough) (income)= new demandIncome ≠spending ( less demand) →leakagesLeakages are flows out of the circular flow that occur when factor income is received and not spent directly on purchases.Injections are added spending in the circular flow that are not paid for out of factor income.Underinvestment Theory: the theory that recessions occur because of inadequate investment in the economy.spending on consumption is less than total incomethe difference must take the form of investmentPhases of the Cyclestwo phases: contraction 扩张and expansion 收缩The top: peakThe lowest point: troughfour phases:prosperity 繁荣;recession 衰退, 不景气;depression 萧条;recovery 复苏recession: GDP ↓continuously for two quarter (demand, investment, employment, production output, profit, even stock price and interest rate ↓)depression: long and continuous recession spreadA peak exists whenever an overall high level of economic activity prevail.A contraction occurs whenever the level of business activity drops noticeably.The trough is the period when the level of business activity has dropped as far as it is going to drop in a particular cycle.Expansion occurs when the level of business activity begins to rise.T rough: low income →low demand →price down →profit low (in spite of low cost ) →employment low →levels of investment low →interest rate downIndustries: less need to replace worn-out capitalConsumers : less need for durable goodsExpansion:Production increase →employment and income increase →demand increase →price rise (but cost rise slower) →profit rise →levels of investment increase →interest rate rise slowly →expansion is on its way to peakPeak:A peak generally has favorable social and political consequences as well as a good economic effect on society e.g. high-level prosperity.Contraction: As production increase, the economy eventually reaches the bottleneck stage. Downswings are certain to occur.Pattern of cycles:contraction →trough →expansion →peak →contractionOnce a contraction has started, a cumulative action among several elements in the economy tends to augment the downswing. During the trough, however, other forces eventually arrest the contraction and start an upward movement. Once this upward motion begins, reactions of individuals and businesses tend to augment the expansion. During the peak, however, forces build up that eventually cause a new contraction.four forces or types of economic change affect the level of business activity:(1)the trend,(2)seasonal variations,(3)random fluctuations,(4)cyclical fluctuations.The trend is the directional movement of the economy over an extended period of time, such as 20 to 30 years.Seasonal variations are recurring fluctuations in business activity over a given period, usually 1 year. The cause of the fluctuations may be natural and artificial.Random fluctuations in business activity resulted from unexpected or unusual events. A serious flood or drought can affect certain portions of the economy or even the economy as a whole. Cyclical fluctuations are changes in the level of business activity that come about regardless of the trend, seasonal variations, or random forces.internal forces of business cycles: are elements within the very sphere of business activity itself and include such things as production, income, demand, credit, interest rates, and inventories.external forces of business cycles: are elements outside the normal scope of business activity and include population growth, wars, basic changes in the nation‘s currency, and national economic policies, as well as floods, droughts, and other catastrophes (disasters) that have a pronounced effect on business activity.T ypes of business cyclethe Kitchin inventory cycle (3–5 years) —after Joseph Kitchin(约瑟夫.基钦)In 1923---article :"Review of Economic Statistics"---outlining his discovery of a 40-month cycle resulting from a study of U.S. and UK statistics from 1890 to 1922--- based on a stocking /destocking cycleInventory--- production---economythe early phases of a contraction---- inventories: rather high levelretailers supply goods out of inventory and cut orders from producersproduction--- low leveltrough--- inventories depletedcompanies --- replace inventoriesmost current sales --- ordering goods from the producerproduction increases to stimulate the economy to expandsales increase---the size of inventories increasesproduction increase --- greater demand by consumers + build up inventoriesprice increases are anticipated--- firms build up inventories and increase the ratio of inventory to sales--- increase in production (beyond the actual consumer demand)the reverse situation--- contractionthe Juglar fixed investment cycle (7–11 years) — after Clement Juglar (朱格拉)business cycle --- recovery and prosperity are associated with increases in productivity, consumer confidence, aggregate demand, and prices.The French economist identified four phases to each wave: prosperity, crisis, liquidation and recessionthe Kuznets infrastructural investment cycle (15–25 years)—after Simon Kuznets (库兹涅茨), Nobel LaureateRussian-born American economist who carried out research on the U.S. real-estate cycle. analyzed and quantified the cyclical nature of production and prices in spans of fifteen to twenty yearsThe Kondratiev wave or cycle (45–60 years) (grand supercycles)—after Nikolai Kondratiev (尼古拉·康德拉季耶夫)cycles of boom followed by depressionvisible in international production data than in individual national economiesconcerns output rather than pricesKondratiev wave --- two 'seasons': the Kondratiev Fall--- and the Kondratiev Wintera bull market is associated with 'fall' and a bear market with ‗winter‘the Forrester cycles (200 years) - after Jay Wright Forrester.the T offler civilization cycles (1000-2000 years) - after Alvin Toffler.Joseph Alois Schumpeter (约瑟夫·阿洛伊斯·熊彼特) suggested a model in which the four main cycles, Kondratiev(54 years), Kuznets (18 years), Juglar (9 years) and Kitchin (about 4 years) can be added together to form a composite waveform.A Kondratiev wave could consist of three lower degree Kuznets waves. Each Kuznets wave could, itself, be made up of two Juglar waves. Two (or three) Kitchin waves could form a higher degree Juglar wave.the four waves can be added together to form a composite waveformActually there was considerable professional rivalry between Schumpeter and Kuznets. The wave form suggested above might not include the Kuznets Cycle simply because Schumpeter did not recognize it as a valid cycle.Schumpeter suggested such a model.Contemporary opinion is that there is insufficient evidence decisively to determine whether or not the cycles do synchronize (同步) in this way.Schumpeter argued that long waves stemmed from innovation.2. the economic cycles of the world economy after the World War IIfive economic crisis since the end of World War II,(1) the first economic crisis: 1957---1958 started from the US in April 1957 and soon spread to Canada, countries in west Europe and Japan. It lasted for about one year.remarkable features: at the same time; the prices did not fall but rise.(2) the second economic crisis: 1973-1975The first “oil shock” occurred in the last quarter of 1973.a good example for an aggregate supply shock →a world economic crisis(any unanticipated shift in aggregate demand or supply are called aggregate demand shocks or aggregate supply shocks) .features for this crisis:a)it lasted a long time and the production fell down dramatically: 22 months for UK, 15months for Japan, 14 months for west Germany and 9 months for France and America.The industrial production decreased by 15.4% in the US, 11.2% in UK, 16.3% inFrance.b)bankruptcy and unemployment: about 120 thousand large firms with property more than1 million US dollars went bankrupt. The number for jobless people even reached 18.5million.c)the stock market fell drastically. (stock price index ↓76%~32%) Investment ↓20%,180 banks went bankrupt in America,d)serious inflation →stagflationtrade protection →decrease of the international trade(3) The third economic crisis: 1979~1982features:a)stagflation;b) a long time and had an intricate progress:c)bankruptcy and unemployment reached the highest record. e.g. in 1981, firms wentbankrupt: in Britain: 14,000; in France: 20,900; in west Germany: 8,500; in 1982,in the US 25,000 firms went bankrupt. At the end of 1982, the US and EC had 120million people out of work.d)the developing countries were hurt terribly.(4) The fourth economic crisis: 1990~1993features: a short crisis in America . a long time for the crisis in the world.(5) The fifth economic crisis: 2001~2002 imports of the US decreased continuously from the first quarter of 2001, which impacted on the exports of EU and Japan(6) The six economic crisis: 2008~In 2007,subprime crisis occurred in USSept. 15 2008, Lehman Brothers applied for bankruptcy protection.Sept. 16, US stock market ↓Crisis startedApril 28 2008Bufflet: recession---more serious than most people expect700 billion USDbailoutUS $700 billion for financial bailoutOctober 3, 2008--- the US Senate passed the $700 billion bank bailout bill.$85.3 billion in loans to automakers and their financing arms through the Automotive Industry Financing Program$79.3 billion to Financial firms$69.8 billion to purchase preferred shares of American International Group (AIG)$55 billion to back any losses that the Term Asset-Backed Securities Loan Facility might incur;$50 billion to Citigroup$50 billion to back any losses that the homeowners faced$45 billion in stock purchases of Bank of America$15 billion to small business$100 billion to Public-PrivateThe government has provided money to hundreds of banks and a handful of insurers and automakers as part of the $700 billion Troubled Asset Relief Program. Some small firms have repaid the government, and many big banks have announced they intend to return the money.China's 4 trillion yuan stimulus packageOn 9 November 2008, the Chinese government announced a two-year 4 trillion-yuan (us$ 586 billion ) stimulus plan to bolster economic expansion.1.5 trillion yuan to invest in railways, highways, airports, water conservancyand other major infrastructure facilities construction and urban power grids;1 trillion yuan for the Sichuan Earthquake Restoration and Reconstruction;400 billion yuan to invest in protective housing construction; rural water circuit370 billion yuan to invest in housing and other livelihood projects and gas infrastructure;150 billion yuan to invest in health care, education, health and other social undertakings;210 billion yuan in energy-saving emission reduction and eco-engineering370 billion yuan in self-innovation and structural adjustment.Most remarkable features about the economic crises after the Second World Wara)mild crises:b)Stagflationc)No very serious monetary credit crisismild crises: in 1929, industrial production↓46.2% in the US, ↓32.3% in UK, ↓32.9% in France.In 1973~1975, the industrial production↓15.4% in the US, ↓11.2% in UK, ↓16.3% in France.reasons for such a result: modern monetary, fiscal, and other measuresautomatic stabilizersmodern scientific technologyAutomatic, or built-in, stabilizers (in US): Special provisions of the tax law that cause changes in the economy without the action of Congress and the president. In other words, automatic stabilizers counter ups and downs in fiscal activity without the necessity for legislative action.e.g: the progressive income tax system , Social Security system : unemployment compensation and pension for old people.the progressive income tax system: in US, maximum rate: 40%.For an individual, as taxable income rises, the marginal tax rate rises, and as taxable income falls, so does the marginal tax rate. The average tax rate falls when less is earned. Unemployment Compensation:unemployment compensation stabilizes aggregate demand. Stabilizing Impact: The key stabilizing impact of the progressive income tax and unemployment compensation is their ability to mitigate changes in disposable income, consumption, and the equilibrium level of national income.the ―visible hand‖---the intervention of the government.Fiscal policy: is defined as the discretionary change in government expenditures and /or taxes in order to achieve such national economic goals as high employment or reduced inflation. (National goals may be: high employment, price stability, economic growth, and improvement in the nation‘s international payments balance)Changes in the government‘s fiscal stance (that is, the difference between government spending and taxation) will change the level of aggregate demand.If economy is at equilibrium output, increases in spending (or tax cuts) will lead to an inflationary boom, which eventually will lead only to higher prices.。

InternationalEconomicsII国际经济学

International Economics, 8e (Krugman) II Chapter 12 National Income Accounting and the Balance of Payments1) A country's gross national product (GNP) isA) the value of all final goods and services produced by its factors of production and sold on the market in a given time period.B) the value of all intermediate goods and services produced by its factors of production and sold on the market in a given time period.C) the value of all final goods produced by its factors of production and sold on the market in a given time period.D) the value of all final goods and services produced by its factors of production and sold on the market.E) the value of all final goods and services produced by its factors of production, excluding land, and sold on the market in a given time period.Answer: A2）The CA is equal toA) Y - (C - I + G).B) Y + (C + I + G).C) Y - (C + I + G).D) Y - (C + I - G).E) None of the above.Answer: A3）For open economies,A) S = I.B) S = I + CA.C) S = I - CA.D) S > I + CA.E) S < I + CA.Answer: B4）A U.S. citizen buys a newly issued share of stock in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. How is this transaction accounted for in the balance of payments?A) financial account, U.S. asset exportB) current account, U.S. service importC) current account, British good exportD) financial account, British asset importE) financial account, U.S. asset importAnswer: A5) The earnings of a Spanish factory with British ownersareA) counted in Spain's GDP.B) are part of Britain's GNP.C) are counted in Britain's GDP.D) are part of Spain's GNP.E) Only A and B.Answer: E6）"The Balance of payments is always balanced." Discuss.Answer: True. Every international transaction automatically enters the balance of payments twice, once as a credit and once as a debit.Current account + financial account + capital account = 07) "The balance of payments accounts seldom balance in practice." Discuss.Answer: True. The main reasons are due to the fact that data collected or received from different sources may differ in coverage, accuracy, and timing. In addition, data on services are not reliable as well as data from the financial account. Moreover, accurate measurements of international interest and dividend receipts areparticularly difficult.8）Fill in the following table:Answer:Chapter 13 Exchange Rates and the Foreign Exchange Market: An Asset Approach1）How many British pounds would it cost to buy a pair of American designer jeans costing $45 if the exchange rate is 1.80 dollars per British pound?A) 10 British poundsB) 25 British poundsC) 20 British poundsD) 30 British poundsE) 40 British poundsAnswer: B2) An appreciation of a country's currency,A) decreases the relative price of its exports and lowers the relative price of its imports.B) raises the relative price of its exports and raises the relative price of its imports.C) lowers the relative price of its exports and raises the relative price of its imports.D) raises the relative price of its exports and lowers therelative price of its imports.E) None of the above.Answer: D3) Which major actor is at the center of the foreign exchange market?A) corporationsB) central banksC) commercial banksD) non-bank financial institutionsE) None of the above.Answer: C4) What is the expected dollar rate of return on euro deposits with today's exchange rate at $1.10 per euro, next year's expected exchange rate at $1.166 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%?A) 10%B) 11%C) -1%D) 0%E) None of the above.Answer: B5) What is the expected dollar rate of return on dollar deposits with today's exchange rate at $1.10 per euro, next year's expected exchange rate at $1.165 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%?A) 10%B) 11%C) -1%D) 0%E) None of the above.Answer: A6）If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, and the expected return on dollar depreciation against the euro is 4 percent, thenA) an investor should invest only in dollars.B) an investor should invest only in euros.C) an investor should be indifferent between dollars and euros.D) It is impossible to tell given the information.E) All of the above.Answer: C7）Discuss the effects of a rise in the interest rate paid byeuro deposits on the exchange rate.Answer: There are two effects to consider. If we make the unrealistic assumption that the expected exchange rate will not change, then a rise in the interest rate paid by Euro deposits causes the dollar to depreciate. However, if the expected exchange rate were to rise, then the current exchange rate would also rise. (See figure 13-6 from the text.)8) Calculate the interest rate in the euro zone if interest parity condition holds, for the following 15 cases: Answer:Chapter 14 Money, Interest Rates, and Exchange Rates1）Money includesA) currency.B) checking deposits held by households and firms.C) deposits in the foreign exchange markets.D) Both A and B.E) A, B, and C.Answer: D2）The aggregate money demand depends onA) the interest rate.B) the price level.C) real national income.D) All of the above.E) Only A and C.Answer: D3）Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of a temporary increase in the European money supply on the dollar/euro exchange rate.Answer: An increase in the European money supply will reduce the interest rate on the euro and thus will cause the schedule of the expected euro return expresses in dollars to shift down, causing a reduction in the dollar/euro exchange rate, i.e., an appreciation of the U.S. Dollar. The euro depreciates against the dollar. The U.S. money demand and money supply are not going to be affected, and thus the interest rate in the U.S. will remain the same.4) A permanent increase in a country's money supplyA) causes a more than proportional increase in its price level.B) causes a less than proportional increase in its pricelevel.C) causes a proportional increase in its price level.D) leaves its price level constant in long-run equilibrium.E) None of the above.Answer: C5）After a permanent increase in the money supply, A) the exchange rate overshoots in the short run.B）the exchange rate overshoots in the long run.C) the exchange rate smoothly depreciates in the short run.D) the exchange rate smoothly appreciates in the short run.E) None of the above.Answer: A6）"Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead to future increase in the price level." Discuss.Answer: The statement is true. The pressures come from three main sources: excess demand for output and labor; inflationary expectations; and, raw material prices.7）The long run effects of money supply change:A) ambiguous effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the opposite direction.B）proportional effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the same direction.C) no effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the same direction.D) no effect on the long-run values of the interest rate or real output, no change in the price level's long-run value.E) ambiguous effect on the long-run values of the interest rate or real output, A disproportional change in the price level's long-run value in the same direction.Answer: CChapter 15 Price Levels and the Exchange Rate in the Long Run1）Under Purchasing Power Parity,A) E$/E = PUS/PE.B) E$/E = PE/PES.C) E$/E = PUS + PE.D) E$/E = PUS - PE.E) None of the above.Answer: A2）Assuming relative PPP, fill in the table below: Answer:3) Under PPP (and by the Fisher Effect), all else equal,A) a rise in a country's expected inflation rate will eventually cause a more-than proportional rise in the interest rate that deposits of its currency offer in order to accommodate for the higher inflation.B) a fall in a country's expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer.C) a rise in a country's expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer.D) a rise in a country's expected inflation rate will eventually cause a less than proportional rise in the interest rate that deposits of its currency offer to accommodate the rise in expected inflation.E) None of the above.Answer: C4）Describe the chain of events leading to exchange rate determination for the following cases:(a) An Increase in U.S. money supply(d) Increase in growth rate of U.S. money supply(c) Increase in world relative demand for U.S. products(d) Increase in relative U.S. output supplyAnswer: Chain of events leading to exchange rate determination:E= ∈/$q× (P us/P E)∈/$Increase in U.S. money supply: Pus rises in proportion to the money supply; q remains the same. All dollar prices will rise (including dollar price of euro).Increase in growth rate of U.S. money supply: Inflation rate, dollar interest rate, Pus, E, rises in proportion to Pus.Increase in world relative demand for U.S. products: E falls, and q does as well.Increase in relative U.S. output supply: Dollar depreciates, lowers relative price ofU.S. output, rise in q, effect on E is not clear since q and Pus work in opposite directions.5）Which of the following statements is the mostaccurate?A) Relative PPP is not a reasonable approximation to the data.B) Relative PPP is sometimes a reasonable approximation to the data but often performs poorly.C) Relative PPP is sometimes a reasonable approximation to the data.D) PPP is sometimes a reasonable approximation to the data.E) PPP is sometimes a reasonable approximation to the data but usually performs poorly.Answer: B6) Interest rate differences between countries depend onA) differences in expected inflation, but not on expected changes in the real exchange rate.B) differences in expected changes in the real exchange rate, but not on expected inflation.C) neither differences in expected inflation, nor on expected changes in the real exchange rate.D) differences in expected inflation and nothing else.E) differences in expected inflation, and on expected changes in the real exchange rate.Answer: E8) What is the real exchange rate between the dollar and the euro equal to?Answer:Let,∙Real dollar/euro exchange rate =q∈/$∙Nominal exchange rate =E∈/$∙Price of an unchanging basket in US = Pus∙Price of an unchanging basket in Europe = PEThen,q= (∈/$E× P E)/Pus∈/$A rise in the real dollar/euro exchange rate is called a real depreciation of the dollar against the euro, a fall in purchasing power of the dollar.A fall in the real dollar/euro exchange rate is called a real appreciation of the dollar against the euro, a rise in purchasing power of the dollar.Chapter 16 Output and the Exchange Rate in the Short Run1）A country's domestic currency's real exchange rate, q, is best described byA) the price of similar goods in the same market.B) the price of the domestic basket in terms of the foreignone.C) the price of a domestic basket.D) the price of the foreign basket in terms of the domestic basket.E) the price of different goods baskets in the same market.Answer: D2）Fill in the following table:Answer：3) How does a rise in real income affect aggregate demand?A) Y ↑implies Yd ↑implies Im ↑implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by moreB) Y ↑implies Yd ↑implies Im ↓implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by moreC) Y ↑implies Yd ↑implies Im ↑implies CA ↑implies AD ↑, and Y ↑implies Yd ↑implies C ↑implies AD ↑D) Y ↑implies Yd ↑implies Im ↑implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by lessE) Y ↑implies Yd ↑implies Im ↓implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by lessAnswer: A4）The aggregate demand for home input can be written as a function of:I. Real exchange rate.II. Government spending.III. D isposable income.A) I onlyB) III onlyC) I and IIID) II and IIIE) I, II, and IIIAnswer: E5) In the short-run, any rise in the real exchange rate, EP /P, will causeA) an upward shift in the aggregate demand function and a reduction in outputB) an upward shift in the aggregate demand function and an expansion of outputC) a downward shift in the aggregate demand function and an expansion of outputD) an downward shift in the aggregate demand function and a reduction in outputE) an upward shift in the aggregate demand function but leaves output intactAnswer: B6) In the short-run, any fall in EP/P, regardless of its causes, will causeA) an upward shift in the aggregate demand function and an expansion of outputB) an upward shift in the aggregate demand function and a reduction in outputC) a downward shift in the aggregate demand function and an expansion of outputD) an downward shift in the aggregate demand function and a reduction in outputE) an upward shift in the aggregate demand function but leaves output intactAnswer: D7) In the short-run, a temporary increase in the money supplyA) shifts the AA curve to the right, increases output and depreciates the currency.B) shifts the AA curve to the left, increases output and depreciates the currency.C) shifts the AA curve to the left, decreases output and depreciates the currency.D) shifts the AA curve to the left, increases output and appreciates the currency.E) shifts the AA curve to the right, increases output and appreciates the currency.Answer: A8）If the economy starts in long-run equilibrium, a permanent fiscal expansion will causeA) an increase in exchange rate, E.B) a decrease in exchange rate, E.C) an increase in output, Y.D) a decrease in output, Y.E) shifting of the AA curve up and to the right. Answer: BChapter 17 Fixed Exchange Rates and Foreign Exchange Intervention1) A central bank's international reserves includeA) any gold that it owns.B) any silver that it owns.C) any gold that it owns and foreign and domestic assets.D) any silver that it owns and foreign and domestic assets.E) only foreign and domestic assets.Answer: C2）A balance sheet for the central bank of Pecunia is shown below:Central Bank Balance SheetAssets LiabilitiesForeign assets $1,000 Deposits held by private banks $500Domestic assets $1,500 Currency in circulation $2,000Please write the new balance sheet if the bank sells $100 worth of foreign bonds for domestic currency. Answer:Central Bank Balance SheetAssets LiabilitiesForeign assets $900 Deposits held by private banks $500Domestic assets $1,500 Currency in circulation $1,9003）If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at Eo? Please explain with the aid of a figure.Answer:No, the rise in output leads to an excess demand for money. If the central bank does not increase supply to meet this demand, the domestic interest rate would rise above the foreign rate, R*. This higher rate of return (and given expectations in the foreign exchange market) would cause the exchange rate to fall below Eo.4）Under fixed exchange rate, in general,A) the domestic and foreign interest rates are equal, R = R .B) R = R+ (Ee - E)/E.C) There is no relation between the fixed exchange rate and the interest rates both foreign and domestic.D) E is equal to one.E) None of the above.Answer: A5) A balance of payments crisis is best described asA) a sharp change in interest rates sparked by a change in expectations about the level of imports.B) a sharp change in foreign reserves sparked by a change in expectations about the future exchange rate.C) a sharp change in interest rates sparked by a change in expectations about the level of exports.D) a sharp change in foreign reserves sparked by a change in expectations about the level of imports.E) None of the above.Answer: B6) Use a figure to illustrate the ineffectiveness of monetary policy to spur on an economy under a fixed exchange rate.Answer:The initial equilibrium rests at point 1. If the central bank wishes to use monetary policy to increase output from Y1 to Y2, then they might buy domestic assets and shift the AA curve outward. However, the central bank must maintain a fixed exchange rate E0, so would have to sell foreign assets for domestic currency, returning the economy to point 1.7）Use a figure to explain the potential effectiveness of fiscal policy to spur on the economy under a fixed exchange rate.Answer:With an aim toward increasing output, the government could use fiscal policy to shift the DD curve outward. The central bank will have to take steps to maintain a fixed exchange rate E0, among the options is buying foreign assets with money, to shift the AA schedule outward until the equilibrium at point 3 is reached。

HNDEconomicsTheWorldEconomy世界经济学报告

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 FreeTrade--------------------------------------------------------------------------3Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4Barriers to trade-------------------------------------------------------------------4WTO and EU----------------------------------------------------------------------5Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14SingleCurrency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16Current issues that face LDCs--------------------------------------------------16The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17 Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanationof benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which aremore valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service to pre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries.Example: Korea and Japan have following production possibilities for twocommodities, mobile phones and computers; assume that all the resources owned by each country are same.It is clear that Japan has an Absolute advantage over Korea in both commodities. But the advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000 For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, throughmethods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methods are—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax maybe ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper. Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flowsaround the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions on factor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote andsmooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years. The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billionin 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which hasresulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed its liabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns)the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄ is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to the same amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄ is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest ratelower and the commitment to low inflation should allow economies to operate with lower cost.Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rateand commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs)Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies. Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and areexpensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economicgrowth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites /wiki/Protectionism/eurocash.asp/Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

International Economics II国际经济学

International Economics, 8e (Krugman) IIChapter 12 National Income Accounting and the Balance of Payments1) A country's gross national product (GNP) isA) the value of all final goods and services produced by its factors of production and sold on the market in a given time period.B) the value of all intermediate goods and services produced by its factors of production and sold on the market in a given time period.C) the value of all final goods produced by its factors of production and sold on the market in a given time period.D) the value of all final goods and services produced by its factors of production and sold on the market.E) the value of all final goods and services produced by its factors of production, excluding land, and sold on the market in a given time period.Answer: A2）The CA is equal toA) Y - (C - I + G).B) Y + (C + I + G).C) Y - (C + I + G).D) Y - (C + I - G).E) None of the above.Answer: A3）For open economies,A) S = I.B) S = I + CA.C) S = I - CA.D) S > I + CA.E) S < I + CA.Answer: B4）A U.S. citizen buys a newly issued share of stock in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. How is this transaction accounted for in the balance of payments?A) financial account, U.S. asset exportB) current account, U.S. service importC) current account, British good exportD) financial account, British asset importE) financial account, U.S. asset importAnswer: A5) The earnings of a Spanish factory with British owners areA) counted in Spain's GDP.B) are part of Britain's GNP.C) are counted in Britain's GDP.D) are part of Spain's GNP.E) Only A and B.Answer: E6）"The Balance of payments is always balanced." Discuss.Answer: True. Every international transaction automatically enters the balance of payments twice, once as a credit and once as a debit.Current account + financial account + capital account = 07) "The balance of payments accounts seldom balance in practice." Discuss. Answer: True. The main reasons are due to the fact that data collected or received from different sources may differ in coverage, accuracy, and timing. In addition, data on services are not reliable as well as data from the financial account. Moreover, accurate measurements of international interest and dividend receipts are particularly difficult.8）Fill in the following table:Answer:Chapter 13 Exchange Rates and the Foreign Exchange Market: An Asset Approach1）How many British pounds would it cost to buy a pair of American designer jeans costing $45 if the exchange rate is 1.80 dollars per British pound?A) 10 British poundsB) 25 British poundsC) 20 British poundsD) 30 British poundsE) 40 British poundsAnswer: B2) An appreciation of a country's currency,A) decreases the relative price of its exports and lowers the relative price of its imports.B) raises the relative price of its exports and raises the relative price of its imports.C) lowers the relative price of its exports and raises the relative price of its imports.D) raises the relative price of its exports and lowers the relative price of its imports.E) None of the above.Answer: D3) Which major actor is at the center of the foreign exchange market?A) corporationsB) central banksC) commercial banksD) non-bank financial institutionsE) None of the above.Answer: C4) What is the expected dollar rate of return on euro deposits with today's exchange rate at $1.10 per euro, next year's expected exchange rate at $1.166 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%?A) 10%B) 11%C) -1%D) 0%E) None of the above.Answer: B5) What is the expected dollar rate of return on dollar deposits with today's exchange rate at $1.10 per euro, next year's expected exchange rate at $1.165 per euro, the dollar interest rate at 10%, and the euro interest rate at 5%?A) 10%B) 11%C) -1%D) 0%E) None of the above.Answer: A6）If the dollar interest rate is 10 percent, the euro interest rate is 6 percent, and the expected return on dollar depreciation against the euro is 4 percent, thenA) an investor should invest only in dollars.B) an investor should invest only in euros.C) an investor should be indifferent between dollars and euros.D) It is impossible to tell given the information.E) All of the above.Answer: C7）Discuss the effects of a rise in the interest rate paid by euro deposits on the exchange rate.Answer: There are two effects to consider. If we make the unrealistic assumption that the expected exchange rate will not change, then a rise in the interest rate paid by Euro deposits causes the dollar to depreciate. However, if the expected exchange rate were to rise, then the current exchange rate would also rise. (See figure 13-6 from the text.)8) Calculate the interest rate in the euro zone if interest parity condition holds, for the following 15 cases:Answer:Chapter 14 Money, Interest Rates, and Exchange Rates 1）Money includesA) currency.B) checking deposits held by households and firms.C) deposits in the foreign exchange markets.D) Both A and B.E) A, B, and C.Answer: D2）The aggregate money demand depends onA) the interest rate.B) the price level.C) real national income.D) All of the above.E) Only A and C.Answer: D3）Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of a temporary increase in the European money supply on the dollar/euro exchange rate.Answer: An increase in the European money supply will reduce the interest rate on the euro and thus will cause the schedule of the expected euro return expresses in dollars to shift down, causing a reduction in the dollar/euro exchange rate, i.e., an appreciation of the U.S. Dollar. The euro depreciates against the dollar. The U.S. money demand and money supply are not going to be affected, and thus the interest rate in the U.S. will remain the same.4) A permanent increase in a country's money supplyA) causes a more than proportional increase in its price level.B) causes a less than proportional increase in its price level.C) causes a proportional increase in its price level.D) leaves its price level constant in long-run equilibrium.E) None of the above.Answer: C5）After a permanent increase in the money supply,A) the exchange rate overshoots in the short run.B）the exchange rate overshoots in the long run.C) the exchange rate smoothly depreciates in the short run.D) the exchange rate smoothly appreciates in the short run.E) None of the above.Answer: A6）"Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead to future increase in the price level." Discuss.Answer: The statement is true. The pressures come from three main sources: excess demand for output and labor; inflationary expectations; and, raw material prices.7）The long run effects of money supply change:A) ambiguous effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the opposite direction.B）proportional effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the same direction.C) no effect on the long-run values of the interest rate or real output, a proportional change in the price level's long-run value in the same direction.D) no effect on the long-run values of the interest rate or real output, no change in the price level's long-run value.E) ambiguous effect on the long-run values of the interest rate or real output, A disproportional change in the price level's long-run value in the same direction. Answer: CChapter 15 Price Levels and the Exchange Rate in the Long Run1）Under Purchasing Power Parity,A) E$/E = PUS/PE.B) E$/E = PE/PES.C) E$/E = PUS + PE.D) E$/E = PUS - PE.E) None of the above.Answer: A2）Assuming relative PPP, fill in the table below:Answer:3) Under PPP (and by the Fisher Effect), all else equal,A) a rise in a country's expected inflation rate will eventually cause a more-than proportional rise in the interest rate that deposits of its currency offer in order to accommodate for the higher inflation.B) a fall in a country's expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer.C) a rise in a country's expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer.D) a rise in a country's expected inflation rate will eventually cause a less than proportional rise in the interest rate that deposits of its currency offer to accommodate the rise in expected inflation.E) None of the above.Answer: C4）Describe the chain of events leading to exchange rate determination for the following cases:(a) An Increase in U.S. money supply(d) Increase in growth rate of U.S. money supply(c) Increase in world relative demand for U.S. products(d) Increase in relative U.S. output supplyAnswer: Chain of events leading to exchange rate determination:∈/$E = ∈/$q × (P us /P E )Increase in U.S. money supply: Pus rises in proportion to the money supply; qremains the same. All dollar prices will rise (including dollar price of euro).Increase in growth rate of U.S. money supply: Inflation rate, dollar interest rate, Pus, E, rises in proportion to Pus.Increase in world relative demand for U.S. products: E falls, and q does as well. Increase in relative U.S. output supply: Dollar depreciates, lowers relative price of U.S. output, rise in q, effect on E is not clear since q and Pus work in opposite directions.5）Which of the following statements is the most accurate? A) Relative PPP is not a reasonable approximation to the data.B) Relative PPP is sometimes a reasonable approximation to the data but often performs poorly.C) Relative PPP is sometimes a reasonable approximation to the data. D) PPP is sometimes a reasonable approximation to the data.E) PPP is sometimes a reasonable approximation to the data but usually performs poorly.Answer: B6) Interest rate differences between countries depend onA) differences in expected inflation, but not on expected changes in the real exchange rate.B) differences in expected changes in the real exchange rate, but not on expected inflation.C) neither differences in expected inflation, nor on expected changes in the real exchange rate.D) differences in expected inflation and nothing else.E) differences in expected inflation, and on expected changes in the real exchange rate.Answer: E8) What is the real exchange rate between the dollar and the euro equal to? Answer: Let,∙ Real dollar/euro exchange rate = ∈/$q ∙Nominal exchange rate = ∈/$E∙ Price of an unchanging basket in US = Pus ∙ Price of an unchanging basket in Europe = PEThen,∈/$q= (∈/$E× P E)/PusA rise in the real dollar/euro exchange rate is called a real depreciation of the dollar against the euro, a fall in purchasing power of the dollar.A fall in the real dollar/euro exchange rate is called a real appreciation of the dollar against the euro, a rise in purchasing power of the dollar.Chapter 16 Output and the Exchange Rate in the Short Run1）A country's domestic currency's real exchange rate, q, is best described byA) the price of similar goods in the same market.B) the price of the domestic basket in terms of the foreign one.C) the price of a domestic basket.D) the price of the foreign basket in terms of the domestic basket.E) the price of different goods baskets in the same market.Answer: D2）Fill in the following table:Answer：3) How does a rise in real income affect aggregate demand?A) Y ↑implies Yd ↑implies Im ↑implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by moreB) Y ↑implies Yd ↑implies Im ↓implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by moreC) Y ↑implies Yd ↑implies Im ↑implies CA ↑implies AD ↑, and Y ↑implies Yd ↑implies C ↑implies AD ↑D) Y ↑implies Yd ↑implies Im ↑implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by lessE) Y ↑implies Yd ↑implies Im ↓implies CA ↓implies AD ↓, but Y ↑implies Yd ↑implies C ↑implies AD ↑by lessAnswer: A4）The aggregate demand for home input can be written as a function of:I. Real exchange rate.II. Government spending.III. Disposable income.A) I onlyB) III onlyC) I and IIID) II and IIIE) I, II, and IIIAnswer: E5) In the short-run, any rise in the real exchange rate, EP/P, will causeA) an upward shift in the aggregate demand function and a reduction in outputB) an upward shift in the aggregate demand function and an expansion of outputC) a downward shift in the aggregate demand function and an expansion of outputD) an downward shift in the aggregate demand function and a reduction in outputE) an upward shift in the aggregate demand function but leaves output intact Answer: B6) In the short-run, any fall in EP/P, regardless of its causes, will causeA) an upward shift in the aggregate demand function and an expansion of outputB) an upward shift in the aggregate demand function and a reduction in outputC) a downward shift in the aggregate demand function and an expansion of outputD) an downward shift in the aggregate demand function and a reduction in outputE) an upward shift in the aggregate demand function but leaves output intact Answer: D7) In the short-run, a temporary increase in the money supplyA) shifts the AA curve to the right, increases output and depreciates the currency.B) shifts the AA curve to the left, increases output and depreciates the currency.C) shifts the AA curve to the left, decreases output and depreciates the currency.D) shifts the AA curve to the left, increases output and appreciates the currency.E) shifts the AA curve to the right, increases output and appreciates the currency. Answer: A8）If the economy starts in long-run equilibrium, a permanent fiscal expansion will causeA) an increase in exchange rate, E.B) a decrease in exchange rate, E.C) an increase in output, Y.D) a decrease in output, Y.E) shifting of the AA curve up and to the right.Answer: BChapter 17 Fixed Exchange Rates and Foreign Exchange Intervention1) A central bank's international reserves includeA) any gold that it owns.B) any silver that it owns.C) any gold that it owns and foreign and domestic assets.D) any silver that it owns and foreign and domestic assets.E) only foreign and domestic assets.Answer: C2）A balance sheet for the central bank of Pecunia is shown below:Central Bank Balance SheetAssets LiabilitiesForeign assets $1,000 Deposits held by private banks $500Domestic assets $1,500 Currency in circulation $2,000Please write the new balance sheet if the bank sells $100 worth of foreign bonds for domestic currency.Answer:Central Bank Balance SheetAssets LiabilitiesForeign assets $900 Deposits held by private banks $500Domestic assets $1,500 Currency in circulation $1,9003）If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at Eo? Please explain with the aid of a figure.Answer:No, the rise in output leads to an excess demand for money. If the central bank does not increase supply to meet this demand, the domestic interest rate would rise above the foreign rate, R*. This higher rate of return (and given expectations in the foreign exchange market) would cause the exchange rate to fall below Eo.4）Under fixed exchange rate, in general,A) the domestic and foreign interest rates are equal, R = R.B) R = R+ (Ee - E)/E.C) There is no relation between the fixed exchange rate and the interest rates both foreign and domestic.D) E is equal to one.E) None of the above.Answer: A5) A balance of payments crisis is best described asA) a sharp change in interest rates sparked by a change in expectations about the level of imports.B) a sharp change in foreign reserves sparked by a change in expectations about the future exchange rate.C) a sharp change in interest rates sparked by a change in expectations about the level of exports.D) a sharp change in foreign reserves sparked by a change in expectations about the level of imports.E) None of the above.Answer: B6) Use a figure to illustrate the ineffectiveness of monetary policy to spur on an economy under a fixed exchange rate.Answer:The initial equilibrium rests at point 1. If the central bank wishes to use monetary policy to increase output from Y1 to Y2, then they might buy domestic assets and shift the AA curve outward. However, the central bank must maintain a fixed exchange rate E0, so would have to sell foreign assets for domestic currency, returning the economy to point 1.7）Use a figure to explain the potential effectiveness of fiscal policy to spur on the economy under a fixed exchange rate.Answer:With an aim toward increasing output, the government could use fiscal policy to shift the DD curve outward. The central bank will have to take steps to maintain a fixed exchange rate E0, among the options is buying foreign assets with money, to shift the AA schedule outward until the equilibrium at point 3 is reached。

hnd经济学2世界经济学

----F86E35Economics2:TheWorldEconomy Economics2:TheWorldEconomyF86E35CandidateName:RENLUGradeandClass:2021BA1Introduction (3)1.Freetrade (4)2.Absoluteadvantagesandcomparativeadvantages (4)3.Thebenefitsoffreetrade (5)4.Thepurposeofcarryingouttradeprotectionism (7)5．OneMechanismoftheWorldTradeOrganization (7)6.OnemeasureofEuropeanUnionpromoteseconomicintegration (8)7.Balanceofpayments (9)8.ThegeneraltrendsinUKtradeoverthelast30year (12)9.Thebalanceofpaymentsaffectedbyexchangerates (13)10.Advantagesanddisadvantagesoffixedrateandfloatingrate (14)11.Effectsoffixedrateandfloatingrateonindividualsandcompany (16)12.Thecharacteristicsofthenewlyindustrializedcountriesandthedevelopingcountries (18)13.Theissuesofthenewlyindustrializedcountriesandthedevelopingcountries (19)14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries (19)Conclusion (21)Reference (22)Thisreporthasintroducedtheworldeconomicssimply.Thecontentincludes: Internationaltrade,freetrade,Protectionism,theroleofWTOandunder-developed nation,UKabsoluteandcomparativeadvantage,theprotectionismandtworecent examplesaboutdemonstrateargumentswhichgovernmentmayputforwardforits use,twobarriersoftrade,aEUinitiativeabouttheroleoftheEUinpromotingtrade, thecompositionofthebalanceofpayments,thegeneraltrendsinUKtradeoverthe last30years,thewaywhichthebalanceofpaymentsaffectedbyexchangerates,an analysisoftwocurrentissuesthatfaceLDCs,andtheaidofrecentexamplesabout twoimpactsofmultinationalsonNICsandLDCs.(1).Freetrade isatypeoftradepolicythatallowstraderstoactandtransactwithout interferencefromgovernment.Thus,thepolicypermitstradingpartnersmutualgains fromtrade,withgoodsandservicesproducedaccordingtothetheoryofcomparative advantage.China-ASEANfreetradeareawasformallyestablishedinJanuary1,2021,coveringa populationof1900000000.China-ASEANfreetradearea’sGDPamountedto$6and tradeamountedto$4.5.Itisthelargestfreetradezoneamongdevelopingcountries. AftertheestablishmentofCAFTA,morethan90%productsarecarriedoutforzero tariffsonbothsides.AveragetariffsfromChinesetoASEANdecreasefrom9.8%to 0.1%,AveragetariffsfromASEAN’ssixoldmemberstoChinesedecreasefrom 12.8%to0.6%.Tariffs’hugereductionpromotedtherapidgrowthofbilateraltrade. ChinaandASEANcountries’tradeinvestmentgrows,economicintegrationdeepens, companiesandpeoplearewidelybenefit,realizinggoalsofmutualbenefitandwin-wincooperationandcommondevelopment.ChinaandASEAN’stotalquantityof bilateraltradegrowsrapidly.FromJanuarytoOctoberthisyear,thebilateraltrade volumehasreachedto$295900000000,ayear-on-yeargrowthof25.7%.(2).Absoluteadvantagesandcomparativeadvantages Absoluteadvantages issaidtooccurwhenonecountrycanproduceagoodor servicetopre-determinedqualitywithlessresourcesormorecheaplythananother country. Evenwhenacountryhasanabsoluteadvantageoveranothercountryintermsof commoditiestheywishtotradeitwillstillbetotheirmutualadvantagetotrade providingeachcountryhasthe comparativeadvantages.UKisamajorimporterofmanufacturinggoodssuchclothes,shoes,toys,electronicproducesetc.astheselabororientedconsumergoodswillcostmoreinUKbefore hastheWiththedevelopmentofservice,theadvantageoftradeisservice trade. Thegoodsthatcourtryimportandexportchangeovertimeasthegoodsinwhichthey haveacomparativeadvantagechangeovertime.Before1970s,manufacturing industryisitsabsoluteadvantage.After1970s,serviceindustryismorecompetitive forinternationaltradesuchascomputersoftware,businessserviceand pharmaceuticals.Theseindustryareseentobringthepossibilityoflongtermgrowth, whiletheindustriesbasedonheavycapitalinvestmentorrequiringrelativelycheap laborwillnotbecompetitivewithdevelopingcountries.2.Thebenefitsoffreetrade(1).Goodsandservicesproducedatlowercost.Freetradecanpromotethe cooperationofdifferentcountriesintheworld.Itcandecreasethecostofproducing goods.(2).Greaterrangeofcommoditiesforconsumers,morechoice.Anycountriescannot produceallproducts,theyallhaveproductswhichareunabletoproduce.Tradeallow ustobuyallofthem.Greaterrangeofcommoditiesprovidecustomerswithmore choice.(3).Increasedworld-wideoutput.Eachcountryproducingaccordingtotheir respectiveadvantageshashighefficiency.Underthesameresources,ithashighyield. Therefore,internationaltradeincreasedworld-wideoutput.3.BarrierstoInternationalTrade Tradebarriersaregovernment-inducedrestrictionsoninternationaltrade.Thebarriers cantakemanyforms,includingthefollowingtariffsandnontariffs.NonTarriffBarriers-exchangecontrolsInarealworld,thereisandshouldbeacertaindegreeofgovernmentinterventionon foreignexchange.Importsneedforeigncurrenciestobuygooodsandservicesfrom abroad.Importersmustapplytothecenytalbankforthecurrencytheyneedto purchasegoodsinthatcountry,TheCentralbankcanerxertcontroloverthevariety andvolumeofbothimportsandexportsbycontrollingthequantityofforeign cuurencyitwillissuetoexportersandimporters. NonTarriffBarriers-ImportDepoits Governmentrequiresimporterstolodgeanon-interestbearingdepositinadvance withitsCentralBankbeforetheycanbuygoodsandservicesfromabroad.Besides, thedepositisusuallyinanamountequaltoallorpartofthecostofimportedgoods. Thisistimeconsumingandobviouslyexpensivesinceitreducestheliquidityofthe importingfirms,whichtendtohindertheirimportingactivities.Before1984,the Nigerianadvancedimportdepositrangedfrom50%to200%ofthevalueofalistof importitems.Giveaexampleabouttariffs,35%tariffsonChinesetyresimposedontheUnited Stateson11th Septemberin2021.ItmakeChinesetyresfirmshavetoincreasepriceif salesinAmerica.Forexample,tnontariffsinRussiatoUkraineforembargoeswhichsuspensionof Ukraineimportsofjuiceon29th Julyin2021.ItmakeUkraine’s juicenotallowsale inRussia.4.ThepurposeofraisingbarrierstoInternationalTrade(1)Thepurposeisto protectemployment.FootwearmanufactureersassociationsofItaly,SpainadPortugalarereportedtohave fieldapplicationstotheEUtocurbfootwearimportsfromChina.LocalshoemarkersinElche,thecapitalofSpain’s onceflourishingfootwearindustry,arguethat“m adeinChina〞istakingawaytheirjobsbythatChineseshoeshavebeenboominginSpainjustbecauseofgoodqualityandreasonableprices.(2)Thepurposeistoanti-dumping.InJuly2021,SolarWorldAG,aGermangiant,ledaconsortiumofaround25EUsolarpanelproducerstofileacomplainttotheEUCommissiontoinvestigatewhethertherehasbeendistortionofcompetitionbyChinesecounterpartsduetodumping.SoonGermanyagainstChinalowprice.5．TheRoleofWTOTheWorldTradeOrganization(WTO)isanorganizationthatintendstosupervise andliberalizeinternationaltrade.Theorganizationofficiallycommencedon1January 1995undertheMarrakechAgreement,signedby123nationson15April1994, replacingtheGeneralAgreementonTariffsandTrade(GATT),whichcommencedin 1948.Theorganizationdealswithregulationoftradebetweenparticipatingcountries byprovidingaframeworkfornegotiatingandformalizingtradeagreementsanda disputeresolutionprocessaimedatenforcingparticipants'adherencetoWTO agreements,whicharesignedbyrepresentativesofmembergovernmentsandratified bytheirparliaments.The WTOdisputesettlementmechanism ismeasuresofdealingwithtradedisputes betweenmembers.Itistheeffectivewayforcountriesespeciallythedeveloping countriestoresolvetheeconomicfrictionandsafeguardtheirlegitimaterightsand interests.Itisveryunfavorableforthedevelopingcountriestoresolvetradedisputesespeciallytradedisputeswiththedevelopedcountriesthroughbilateralchannels.The bilateralapproachpursuesstrengthdoctrine.Involvedintradedisputesamong developingcountries,theWTOdisputesettlementmechanismrulingiscomparatively fairandreasonable.Aseitherthecomplainantorrespondent,thelegitimateinterests ofthedevelopingcountrieshavebeeneffectivelyprotected.ItisbecausetheWTO disputeadjudicationhasverystrongfairness,developingcountriesgenerallyhavea highenthusiasmtousetheWTOdisputesettlementmechanism.Somelarger economicscaledevelopingcountriesismoreactiveintheuseofWTOdispute settlementmechanism.Ithelpstoreducetheeconomicfrictionbetweencountries,and promotefriendlyrelationsamongnations.TheUruguayRound wasthe8throundofmultilateraltradenegotiations(MTN) conductedwithintheframeworkoftheGeneralAgreementonTariffsandTrade(GATT),spanningfrom1986to1994andembracing123countriesas "contractingparties".TheRoundledtothecreationoftheWorldTradeOrganization, withGATTremainingasanintegralpartoftheWTOagreements.Thebroadmandate oftheRoundhadbeentoextendGATTtraderulestoareaspreviouslyexemptedas toodifficulttoliberalize(agriculture,textiles)andincreasinglyimportantnewareas previouslynotincluded(tradeinservices,intellectualproperty,investment policytradedistortions)HerearesomeothersareastheWTOhasdealtwithinattemptstoestablishitselfas thepolicingbodypromotingfreetrade.TheBananaDispute.TheWTOruledthatthe EuropeanUniondiscriminatedunfairlyagainsttheUSwithitsbananaimportrules. TheWTOallowedtheUStoslapa$191millionsanctionontheEU.Wasitpaid?We donotknowbutprobablynotso.6.OnemeasureofEuropeanUnionpromoteseconomicintegration The EuropeanUnion(EU)isapolitico-economicunionof28memberstatesthatare locatedprimarilyinEurope.TheEUoperatesthroughasystemofsupranationalinstitutionsandintergovernmentalnegotiateddecisionsbythemember states.Theinstitutionsare:theEuropeanCommission,theCounciloftheEuropean Union,theEuropeanCouncil,theCourtofJusticeoftheEuropeanUnion, theEuropeanCentralBank,theCourtofAuditors,andtheEuropeanParliament.The EuropeanParliamentiselectedeveryfiveyearsbyEUcitizens(1)EUcaneliminatecustomersdutiesandquotasonimportsandexportsofgoodsbetweenmemberstatesandeliminatetariffsbetweenEUmembers.Thoughthe institutions,memberscanestablishcommonpoliciesforagricultureandtransport forfreetrade.(2)Itcanacceleratetheinvestmentfromawiderangeofcontries.WiththerisingstatusoftheeuroanddevelopmentofEuropeancapitalmarket,members’costo capitalwilldecline,whichisconducivetoinvestmentandeconomicgrowth.TheEuropeanCentralBank(ECB)developandimplementaunifiedmonetarypolicy, eachcountry’sinterestrates,pricesandinvestmentreturnswillgraduallynarrow thedifferencesorreachtounanimous,leadingtoanoveralldeclineofpriceandthelevelofinterestrates.7.Balanceofpayments(s:///government/statistics/announcements)The balanceofpayments(BOP)ofacountryistherecordofalleconomic transactionsbetweentheresidentsofacountryandtherestoftheworldinaparticular period(overaquarterofayearormorecommonlyoverayear).Thesetransactions aremadebyindividuals,firmsandgovernmentbodies.Thusthebalanceofpayments includesallexternalvisibleandnon-visibletransactionsofacountryduringagiven period,usuallyayear.Itrepresentsasummationofcountry'scurrentdemandandsupplyoftheclaimsonforeigncurrenciesandofforeignclaimsonitscurrencyThistableillustratescurrentaccount,capitalaccountandfinancialaccountinUK duringthe20yearsfrom1980to2021.Intermsofcurrentaccount,therejustfour yearsthefigureispositivewhenbetween1980and1983.Andthenthefigurealmost negativefrom1984to2021.Andthefigureachievesthelowestnumberabout-55190 millionin2021.ThissituationillustratethattheeconomyofUKdevelopnotvery well.Asforcapitalaccount,thedatashowsthatthisaccountexperienceafluctuatetrend. First,thefigurewas-4millionin1980andthenthefiguredecreaseto-79millionin 1981.Afterthatthefigurewas6millionin1982increaseto159millionin1987. Whatisfunnythingisthefigurefallagainto-39millionin1988.Afterthatthefigure experienceafluctuateandwhatisnotableisthefiguregainalowestnumber-1527 millionin2006.Intermsoffinancialaccount,thefigureseeanpositivetrendfrom2157millionin 1980to122millionin1986.Andthenthefigureexperienceanegativetrendbetween-9690millionin1987and-23296millionin1993.Andfrom-20261millionin1999to-30276millionin2021thisaccountexperiencenegativetrendagain,andgetthe lowestnumberin2021becauseofthefinancialcrisisthefigurewas-39301million.8.ThegeneraltrendsinUKtradeoverthelast30yearOverall,theevolutionoftradeingoodsshowanupwardtrend.Withthequick development,UKneedtokeepupwiththetimes,thecountrymustthroughtradein goodtoincreasecountry’s incomesowiththepassageoftime,therearemoreand moretradeinUK.ThetableshowstheevolutionoftradeingoodsandservicesinUKbetween1980and 2021.Thetradeingoodsaccountstand20billionin1980.Thetradeingoodsaccount hasremainedindeficit.Thedeficitgrewremarkableinthelate1980storeachapeak ofabout24billionin1989.Andthendecreasedbackto20billioninearly1990s andkeepastableat10billionfrom1991to1998.In1998thedeficitjumpedbyover9billion,andithascontinuedtorisesince,reachingacashrecordof92.9billionin2021.Thechartshowsthatthetotalgoodsexportsarelessthanimports,whichleadstodeficit.However,thetotalserviceexportsaremorethantotalserviceimports,whichresultsinsurplus.ItshowsUnitedKingdomisinalargefiscaldeficitinthelast30years.Thehighestsurplusisin1981,howeverthecurrentbalancedeficitfrom1984to1990.From1984to1989,thecurrentbalancedeficitandin1987,thedeficitincreasequickly.The currentbalancedeficitfellsharplyfrom1990to1991.From1992to1997,thecurrentbalanceslightlyfluctuates.Thenfrom2000to2006,thedeficitincreasedsubstantially,althoughfrom2002to2004,thereisaslightdecline.From2007to2021deficithasasteepdecline.Mainreasonmaybeingoodstradebalancedeficits,whilethesurplusontradeinservices,especiallyinthelast30yearsgrowth.Inthepast30yearsBritain'smerchandisetradedecreased,becauseofthehighcostofHR,theUKisfewtodoingthemanufacture,mostgoodsisdependonimported,noexported.Butthefinancialservices,rentingandbusiness,istotallyincreased,sointhepast30years,theUKfinancialhasbeensteadilyincreasing.9.Thebalanceofpaymentsaffectedbyexchangerates(1)Theeffectsofexchangeratesfortradea.Importedgoodswillbedearer,thereforetheTradeinGoodsislikelytomoveintodeficit.Consumersmayturntoconsumemoreimportedgoods;Inflationmaybelowerbecausedomesticfirmsmayreduceprices.Thepriceofi mportedrawmaterials maygodownagainaffectingtheTradeaspect.Consumersmayfinditeasiertobuy importedgoods.b.Domesticgoodsandserviceswillbecheaperbothinforeignanddomesticmarkets.Acountrywhichhasreducedthevalueofitscurrencywouldcertainlybelookingtosellmoreabroad.ThisshouldmeananimprovementinTradeinGoods. CheapercurrencyhelpsboosttheexportSeeanexample:AUKfirmmanufacturesharddiscsforacomputerfirmintheUSA. Sellingprice:100pounds.Exchangerate:1pounds=$1.5CosttotheAmerican:$150.Exchangerate:1pounds=$2CosttotheAmerican:$200 TheAmericanfirmmayconsiderthistobetooexpensiveandlookelsewherefora cheaperalternative.If:Exchangerate:1pounds=$1CosttotheAmerican:$100 TheAmericanfirmmayconsiderthistobecheaper,andbuymore.(2)Theeffectsofexchangeratesforcapitalaccountsa.Manufacturingfirmsmightforexamplebuildupstocksattecheaperpriceandforeigninvestmentmayincreasebecauseprofitssentbackwillbeworthmorein theirdomesticcurrency.b.Itcouldencouragefirmsandindividualstoinvestabroadinthattheforigncurrencyearnedwillbeworthmorewhensentbacktothedomesticmarket. 10.AdvantagesanddisadvantagesoffixedrateandfloatingrateFloatingexchangerate orfluctuatingexchangerateisatypeofexchange-rate regimeinwhichacurrency'svalueisallowedtofluctuateinresponsetomarket mechanismsoftheforeign-exchangemarket.Acurrencythatusesafloatingexchange rateisknownasafloatingcurrency.Afloatingcurrencyiscontrastedwithafixed currency.Advantages.Largereserveswillnotbenecessarytoprotectthecurrencyagainstchangesor speculation.Acountryhasnoobligationtomaintainexchangeratestability,and thereforeitdoesnotneedforeignexchangereserveasmuchasinthefixedexchange rates,whichcansaveforeignexchangefunds.Theexchangeratewillnotbecomeatargetbecausewhicheverwayitmoves,the mechanismshouldstarttooperatequicklytorestoreequilibrium.Theimbalanceofa country'sinternationalbalanceofpaymentscanbeeliminatedbyfreefluctuationof exchangerate.Governmentsdonothavetointroducemeasurestokeepthevalueatafixedrate, whichmightbeharmfultoothersectionsoftheeconomy.Becausethebalanceof paymentsofeachcountrycanadjustbythemselves,whichensuresthestabilityof foreignexchangemarketinacertainextent.Disadvantages.Thefuturesmarketisdesignedtopreventthis.Bybuyingforwardforcommoditiesa priceisagreedwhichdoesnotchangewhenthecommodityisdelivered.Itcausesall countries'instabilityofabilityofinternationalsettlementandcommodityprice.Demandmaybeunstablebecauseexternalpricesofdomesticgoodswillbesubjectto change.Planningproductionmaybedifficult.Theinstabilityofexchangerate increasestheriskofinternationaltradeIfthereisinflationafloatingexchangeratewillnotalwaysdealwithiteffectively becausethedepreciationofthecurrencyintheforeignexchangemarketswillmake importsdearerandassistpossiblecostpushinflation.Fixedexchangerate,sometimescalledapeggedexchangerate,isatype ofexchangerateregimewhereacurrency'svalueisfixedagainsteitherthevalueof anothersinglecurrency,toabasketofothercurrencies,ortoanothermeasureofvalueAdvantages.Theyreduceuncertainty,thismakestradeandinvestmentsbetweenthetwocountries easierandmoreexternalandmorepredictableandisespeciallyusefulforsmall economiesinwhichexternaltradeformsalargepartoftheirGDP.Longtermgrantingofcredits,long-termcontractsandinvestmentoverseasareseen tocarrylessrisk.Itmakesthecapacityoftheinternationalsettlementandthepriceof importandexportgoodsbestable.ThefixedrateplayedacrucialroleinachievingthisgrowthinFDI.Thestabilityof theexchangeratesuppressedthespeculationofforeignexchangemarkettoa certainextent.Disadvantages.Ifdeficitspersistthenreservesofforeigncurrencymaybeusedupquitequickly.It leadstoreductionofexports,thedeficitofinternationalbalanceofpaymentsand moreunstablethecurrency.Countrieswhichhaveapersistentdeficitorsurpluswillhavetotakesomeaction whichmayhavesevereimpactsuponexportsandimportsorboth.Ifinflationoccurstheunderlyingcausewillneedtobetackled.Countriescannotrely ondevaluingthecurrencytogetridoftheproblem.Itweakenedtheautonomyof domesticmonetarypolicy.11.Effectsoffixedrateandfloatingrateonindividualsandcompany FloatingExchangeCompany.Floatingexchangeratesystemputforwardhigherrequirementsforcompany's macro-economicmanagementcapacityanddevelopmentoffinancialmarket.Itincreasescompany’smanagementandoperationcost.Thecompanydirectlyproducesexchangeloss.Individuals.Inthefloatingexchangeratesystem,exchangeratetendtofluctuate significantly,whichisnotconducivetoindividualsinvestmentWithfloating exchangerates,individualsmightspeculateinfinancialmarketsIndividualsare beginningtorealizethechallengeofpriceadvantagerecessionandthenecessityof improvingnonpricecompetitiveness.Theindividualsbegantorealizetheimportanceofmonetarysettlementtiming.Theindividualsbegantorealizetheimportanceofmonetarycurrencyselection.FixedExchangeC ompany.Rigidexchangeratearrangementsmaybeconsideredimplicitexchange rateguarantee,soastoencouragecapitalinflowsintheshorttermandnohedgingof foreigndebt,damagingthecompany’shealthofthefinancialsystem.Fixedrate makesthecompany’sadjustmentofrelativepricebeeasierandsmoother.Itisbeneficialtoalong-termstabledevelopmentofcompany’seconomic.ItisdirectlygeneratetheexchangeratelossesI ndividuals.ItIsconduciveforindividualstomakecostandprofitaccounting,which avoidstheriskofexchangeratefluctuations.Iteasilyleadstocurrencyovervaluationandweakenthecompetitivenessoflocal exports,causingpersonalimbalancesoflong-termcurrent-account.Ithelpsindividualstoeliminatetheriskofexchangerateandreducethetransaction costofinternationaltradeandinvestment.12.Thecharacteristicsofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializedcountries’economicstructureespeciallyindustrialand agriculturalstructurechangessignificantly,andtheproportionofindustryislarger thanagriculture.Intotalexports,theproportionofmanufacturedgoodsincreased, gettingridofthesituationofahalfofthedevelopingcountriesdependingonprimary products.Manyintermediateproductsandmachineryandequipmentrequiredfor productionisstillinthehandsofthedevelopedcountries.Insomeproductionof manufacturedgoods,Brazilisonlydevelopedcountries’assemblyprocessingfactory. Duetotheintroductionofalargenumberofforeigncapital,Brazilhaslargeforeign debts,andtheamountofprincipalandinterestishuge.From2021to2021,the economyofBrazilisnotoptimisticthesituationoftheperiodforthesefouryears,the averageeconomicwasonly1.4%.The developingcountries relyheavilyonagriculturalproduction.Fromthe productionstructureofagriculture,low-incomecountries’shareofagricultureinthe GDPismuchhigherthanthatofdevelopedcountries;fromtheemploymentstructure, theproportionofagriculturallaborinIndiaupto50%~70%;fromtheurbanization level,theproportionofurbanpopulationintotalpopulationoflowandmiddleincome ismuchlowerthanthoseofhighincomecountries.Underdevelopedmarketeconomy isthenatureofIndia’e sconomy.Duetothelongsufferingboundcolonialplunder andfeudalrelationsofproduction,aswellasgovernment’i m s p roperintervention afterindependence,themarketofIndiafailedtooperateandwasdistortedseverely, unabletofunctionasthebasicmeansofresourceallocation.13.Theissuesofthenewlyindustrializedcountriesandthe developingcountries Newlyindustrializingcountry: WhileBrazilintroducinglarge-scaleforeigncapitalandborrowingfromthe internationalfinancialcapital,Brazilcannotsolvetheproblemofexcessive dependenceoninternationalcapitalintheeconomyandcannotsolvetheproblemof establishingindependenteconomicsystemintheinternationaldivisionoflabor. Brazil'swealthgapis21timesthatofFrance,inBrazil's1.6billionofthenational population,"marginalizedpeople"withnofixedincomewashighlyupto50%.Brazil isnotonlythecountrywiththemostcapitalinthethirdworld,butalsothecountry rgerandlargerforeigndebtofprincipleandinterest makeseconomicdevelopmentbeonthebrinkofcollapse.LessDevelopedCountry:Chinafacesthedebtcrisisandfundbackflow.Theagriculturalinfrastructure deterioratesandpercapitaoutputofgraindecreasedcontinuously.Because populationgrowthexceededthegrowthofsocialmaterialproduction,thesocietyhas borroductivityofdevelopingcountryisonly1/23ofthatin developedcountries.Politicalinstabilityandfrequentwarsaggravatedtheexisting difficulties,makingresidentsbecomedestituteandhomeless.14.TheinfluencesMulti-NationalCorporationsbringtonewlyindustrializedcountries.Overall,GeneralElectricCorporationplaysa positive rolefortheeconomic developmentofthesecountries.GeneralElectric’sforeigninvestmenthasbroughtthe capitalrequiredforSingapore’e csonomi c development,technologyandadvanced managementidea,drivingthedevelopmentofthenationalindustry,whichhelpsthese countriestorealizerapideconomicgrowthandquickincreaseinnationalpower objectively.GeneralElectricCorporationprovidesalargenumberofemployment opportunities,whichsolvestheseriousunemploymentissue,maintainingthestability ofsociety.However,italsohas negativeeffects onthestatepower.Generallyspeaking,General ElectricCorporationhassomenegativeeffectsontheindependenceofSingapore’s economicandsocialdevelopment.Somekeysectorsanddepartmentsofnational economyhasriskofbeingcontrolledbytheGeneralElectricCorporation,orhave evenbeencontrolled.Someimplementationofnationalindustrialpolicy,anti-unfair competitionpolicy,laborandenvironmentalpolicyareweakenedbecauseofthe existenceofGeneralElectricCorporation.ConclusionFormthisreport,Wehaveknowsomanyusefulknowledgeaboutinternationaltrad andwecanknowmuchabouttheadvantagesoftradeandthefunctionsofdifferent organizationsplaysintrade.AndwealsoknowalotofBalanceofPaymentofUK andthecharacteristicsandproblemsoflessdevelopedcountries.Reference(1)://cy580/content/2021/03/15/show149282.html(2):///xb/file.asp?fileid=20211237007(3)://ppkao/tiku/shiti/20752.html(4)://imibao/thread-12941-1-1.html(5):///chuangyexinde/202112030934994_2.htm(6):///wiki/Free_trade。

HND国际理财专业课程设置

学生毕业后，除从事理财规划师工作外还可以在金融服务行业从事文职、销售、管理等工作。
课程设置：
HND Financial Services
序号
英文名称
中文名称
学分
1
Business Accounting
商务会计
2
2
Business Law: An Introduction
商法导论
1
3
Communication: Analysing and Presenting Complex Communication
金融服务业规范
1
16
Income Tax
所得税
1
17
Information Technology: Applications Software 2
信息技术应用软件Ⅱ
1
18
Investment
投资学
2
19
Pension Provision
养老金规划
2
20
Personal and Commercial Lending
商务沟通技巧
1
4
Creating a Culture of Customer Care
客户服务文化构建
1
5
Economic Issues: An Introduction
经济学导论
1
6
Financial Sector: An Introduction
金融业导论
1
7
Information Technology: Applications Software 1
信息技术应用软件Ⅰ
1
8
Managing People and OrganisatioAn Introduction

世界经济学Ⅱ

The World EconomyTutor: Qiang LuoStudent: Sibei Lu1 Introduction (3)2 Gains from international trade (3)3 The free trade.................................................../.. (3)4Absolute and comparative advantage (3)5Reason of trade barriers (4)6Trade barriers (4)7Uses of The World Trade Organisation (WTO) (5)8 The role of European Union in promoting trade (5)9 Composition of the balance of payments (5)10General trends in UK trade (6)11The balance of payments affected by exchange rates (7)12Advantages and disadvantages of the single currency of the UK (7)13Two effects on individuals and businesses of single currency (7)14Characteristics of Less Developed Countries (LDCs) (8)15The two current issues that face LDCs (8)16Impacts of multinationals on Newly Industrialized Countries and LDCs (9)17Conclusion (9)18 Reference (9)IntroductionIn this report, I will introduce free trade relevant organizations with example, such as what is free trade, what are its benefits and so on. The resources of this report will be based on knowledge got in the lessons and the information on different website. Gains from international tradeNow, many countries strive to develop international trades, which because it bring many benefits to people. Firstly, the resources around the world are used efficiently because of international trades, and to support more chances of development to many countries, for example, the cost of rice is lower in China than other developed countries, and China can export rice to change some products that produce in China with high cost. Secondly, international trade can make enhance the competition, creativity and spirit of innovation of enterprises and countries, for example, China took part in WOT, automobile industry got strong impact of imported car with low taxation, but then there appear some Chinese automobile business such as BYD and GEELY. Thirdly, some developing countries can raise capital by international trade to reduce the gap between developed countries. For example, in the last 30 years, exporting is the main method to push economic growth in China, and it had obvious effect.The free tradeFree trade is a system of trade policy that allows traders to trade across national boundaries without interference from the respective governments. Under a free trade policy, prices are reflection of true supply and demand, and are the sole determinant of resource allocation. For example, many fruits that are produced in Taiwan are treated by zero tariff, and from 12th September 2021, there are another five kinds of fruit got this treatment, this is a kind of free trade.Absolute and comparative advantageAbsolute advantage is said to occur when one county can produce a good or service to a pre-determined quality more cheaply than another country. Comparative advantage is the original basis for International Trade, although there are now some qualifications the original concept. For example:We will clearly see that Country A has an absolute advantage over Country B in both commodities. But the advantage it has is much greater for Table.For Country A the cost of 1 Table is 9 bales of T-shirt, which is 2160/240For Country B it is 30, which is 1800/60But if we look at the case of T-shirt then we will find that here for Country A the cost of a bale of T-shirt is 1/9 of a tractor, and Country B it is 1/30. In terms of the output of table foregone, T-shirt is cheaper in Country B than in Country A, so Country B has a comparative advantage in T-shirt.Reason of trade barriersFirstly, trade barrier is a measure to protect some industries that are infant or sunrise and without competition that are compared with foreign business. For example, Barack Obama, the American president, decide to impose punitive tax of tire that is imported by China for 3 years, and the firs is 35% of tax. Secondly, as the improvement of people’s living standards, people increasingly care about the impacts of products on health and safety, thus there are many trade barriers about health, safety and hygiene, for example, the Europe has high health, safety and hygiene standards of Chinese exporting foods, there many Chinese business can not meet the standards and then give up to export foods to Europe.Trade barriersTrade barriers are government-induced restrictions on international trade. Such as embargoes that are an extreme form of barrier and usually relate with politic. A resolution was passed by the United Nations, which is implementing oil and weapon embargoes. It is well known, oil industry is the mainstay industry of Libya. It will bring strong impact to Libya. Subsidies are payment by government to producers, very often agricultural to reduce the costs of supplying products. For example, European government offers subsidies to farmers to protect agriculture.Uses of The World Trade Organisation (WTO)The World Trade Organisation (WTO) is an organisation that intends to supervise and liberalize international trade. The nature of WTO is through negotiations ofmulti-lateral to phase down trade barriers and then achieve international trade of liberalization, and resolve conflicts of trading between countries. For example, America litigated Chinese enterprises dumping of goods (Warmwater Shrimp and diamond saw blade), and take the measure that zeroing, the Chinese side thinks it is unfair and break the rule of WTO and applying for WTO to set expert group. This example show clear that WTO is very important platform to resolve trade disputes. The role of European Union in promoting tradeThe European Union (EU) is an economic and political union of 27 independent member states which are located primarily in Europe. The free movement of goods, people, services and capital is the fundamental principle of the EU. The EU is organizer, plotter and manager in promoting trade. EU has once currency, which resolves many trade problems that about exchange rate, it has positive impact on promoting trade. Beside, EU promote free trade between member countries, but set trade barrier to other non-member countries to protect businesses that in member countries, such as flat tax.Composition of the balance of paymentsBalance payment is the record of all financial transactions between a country (in this case the UK) and the International economy. It is split into two areas. Firstly the Current Account measuring Trade in Goods and Services and the Capital Account which tracks Capital flows into and out of the UK.The main compositions of the balance payment are:●The Current Account– this section concerns income and expenditure and isdivided into four categories. These are Trade in Goods, Trade in Services, Income and Current Transfers.●The Capital Account– this is the account which was first established in 1998, ithas two categories that is Capital Transfers and Acquisition/Disposal of nonproduced/non financial Assets, purchase or sales of e.g. land by foreign embassy or patents, copyrights, trademarks, franchises and leases.●The financial Account– this has the same four categories as the income accountthat are Direct Investment, Portfolio Investment, Oil Investment and ReserveAssets.The International Investment Position –the stock of External Financial Assets and Liabilities.General trends in UK tradeIn the last 30 years, the UK has traditionally had a fairly large deficit in the trade of goods balance, particularly in 1989, the deficit in trade of goods reached the higher point. Except for early 1980s, the main reason is export of North Sea Oil. On the contrary, the trade in services that has surplus, from 1995, there it rose dramatically. But no enough to counter the very large deficit of trade in goods, therefore the Current Account Balance has also usually been in deficit.The balance of payments affected by exchange ratesAs we know, balance of payments and exchange rates both are related to export and import, so balance of payment is affected by exchange rates, which can be proved by a simple example:A UK firm manufactures software that named A for a USA company, the UK firm sale A as ￡50, the exchange rate between dollar and sterling is $1.5 = ￡1, which means the USA company has to spend $75 to buy A. If the exchange rate changes to $2 = ￡1, which means the USA company has to spend $200 to buy the a same product. As the increasing of cost, the USA company might change the supplier who provides a cheaper price.For the same reason, the strength of the UK pound could affect many UK businesses particularly in manufacturing sector, because their products are more difficult to sale to oversea with the original price. The export decreases for effect of exchange rate, therefore, the balance of payment will be affected as well.Advantages and disadvantages of the single currency of the UK Disadvantages:●Firstly, the government of the UK will lose power to control the currency, whichmeans the UK will not have the independent monetary policy for example, the UK government can decide how many currency to supply in the year, and thegovernment can according to the own economic circumstance of the UK todecide the interest rate.●Secondly, misalignment of Exchange rates – an exchange and interest rate whichbenefits most members may not benefit all.Advantages:●Firstly, the oversea investment will be increased, because the single currencyavoids the risk of exchange rate fluctuation.●Secondly, the single currency eliminates the price discriminations and will helpcreate pressure to keep prices low.Two effects on individuals and businesses of single currency Effects on individuals:●Firstly, the single currency will eliminate the price discrimination, which canbenefit individual consumers.●Secondly, the single currency will save the cost of exchanging, for example, ifEnglish travel to other Europe country, and people do not need pay money tobank for exchanging currency.Effects on businesses:●Firstly, businesses do not need to consider the risk of exchange rate of fluctuation.●Secondly, businesses can save the cost of exchanging currency, for example, aEuropean business want to invest in the UK, this business do not need toexchange euro to sterling, which means it do not need pay to the banks.Characteristics of Less Developed Countries (LDCs)Less developed countries are nations with a low level of material well-being. The major characteristics of less developed countries are subsistence agriculture, little capital equipment employed and low productivity. The birth rate and infant mortality is high, people with low life expectancy. For example, The Federal Democratic Republic of Ethiopia is a typical less developed country, the average GDP is 121 dollars. Agriculture is the majority of economic system (coffee beans, flowers, Catha edulis Forssk), lack of foundation of industries. The weak defense force is the feature of less developed country as well. As of 2004, the enrollment of university in Ethiopia is 2.5%, which reflect the feature of less developed country.The two current issues that face LDCsLDC s have to face the issue that how to achieve sustainable development. In LDCs, people have less money and material to meet their needs, thus they do something for short-term interests, for example, in Ethiopia, there are many farmers grow Catha edulis rather than crops, because the price of Catha edulis is very high, but crops can not have harvest if the field was grew Catha edulis, which means if farmers grow Catha edulis, they have to always grow it.Secondly, many children can not accept formal education, because these LDCs have not enough resources and facilities, on the other side, the parents don’t have the sense of importance of education, which causes the younger generation is same with the last generation, and then the development of the country would be stopped.The suggested solution could be looking for help from international aid agencies, such a World Bank, to get money to develop industries and education.Impacts of multinationals on Newly Industrialized Countries and LDCsMultinationals could increase income, bring more jobs, and economic growth and so on.For example, Inter invests 0.375 billion dollar to build a factory in Chengdu of China, which can offer around 3000 jobs. Inter can attract relevant enterprises come to Chengdu to develop the IT industry of Chengdu. Besides, Inter Company operate internationally with large volume of importing and exporting, which can promote the development of delivery industry.The World Bank set up a project with 5 billion dollars to invest the local currency denominated bounds of less developed countries, which can help less developed country to develop industries, education and health care industry and son. Besides, the money to feed and save more people, which can help the society is stable, ConclusionFree trade and sustainable development are vital elements of world economy, international trade could promote the development of economy, but for the large range, more issues have to be considered, such as exchange rate, political risk and barriers and so on. However, the international trade brings more benefits to us than drawbacks, which meets the needs of us better and save the nature resources.ReferenceEconomics 2: The World Economy。

hnd世界经济2

7 Referring to UK trade figures from recent years explain the composition of the UK balance of payment.Balance of payment:Balance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time.Structure of Balance of Payment (UK)The Current Account concerns that income and expenditure and is divided into four categories include that Trade in Goods, Trade in Services, Income and Current Transfers.The Capital Account: tracking Capital flows into and out of a country. Important part of the capital account is non-productive capital transfers and acquisition of non-financial assets to buy / sell.The Financial Account: dealing with flow of direct portfolio and investment and reserve assets and the International Investment PositionNet Errors and Omissions: it does not have all the accurate figures to hand.8 What are the general trends in UK trade over the last 30 years, you should refer to the current balance over this period in your response.In generally, Trade in goods has a trend is that has been in a deficit state at the last 30 year. Such as, The UK has been a lot of deficit at the traditional trade in goods. That is to say,Britain in the past 30 years, Trade in goods exports is increasing, but the Trade in goods imports greater than exports, thus giving rise to the deficit. At 2009, it occurs that the largest trade deficit. 2011 China's commodity exports up by 2.5%, the Trade deficits expanded.In general, Trade in services has a trend is that upward movement at the last 30 year. For example, The UK has a slowly increasing from 1984 to 1994, and it is slowly. However, after 2000, the service rate is very huge trade surplus. At the 2006, Trade in services of the UK has a huge immediate significance increase form 1990. ( ) . 2010 China appeared $ 4.1 billion Surplus in trade in services9How is the balance of payments affected by exchange rates? You may provide a basic theoretical example or recent case to illustrate this.Due to the currency weakens (devalues), therefore, the exports will become cheaper. On the contrary, the country has to pay more cost to imports the products and services. The products and services of the country is cheaper than the other countries’, therefore, it will lead to the country will increase export volume. This is come to a surplus of international balance of payments. However, there are some specific country has the fixed needs for the goods and services which will reduce trade and appears current balance deficit.At the current appreciation, then the country will import many cheap goods and services rather than export. This way will lead to the international balance of payments deficit. On the other hand, there is a specific fact when the country has a fixed need for the goods and services. Then the values of export will increase which lead to the current account balance surplus.10. Identify three advantages and three disadvantages for each of two of the following:The advantage of fixed exchange rateAt first, fixed exchange rate can reduce uncertainty for long term contracting and investing.On the other hand, fixed exchange rate cans promote international trade and investment.At last, fixed exchange rate can imposes discipline to avoid inflation.For example, a country’s Central Bank can control the money supply, so it will adjust the amount of money in circulation to avoid the inflation.However, fixed exchange rates have disadvantages as well:At first, a fixed exchange rate fails to identify the degree of comparative advantage or disadvantage of the nation and may lead to inefficient allocation of resources throughout the world.What’s more, there exists the possibility of policy delays and mistakes in achieving external balance.The last, Speculators can place immense pressure upon the fixed rates.Floating exchange ratesFloating exchange rates have these main advantages:At first, the country monetary policy need not keep official reserves to support deficits because the market will simply fall to correct the disequilibrium.What’s more, the price of the currency moves up or down in accordance to ma rket supply and demand.The last, floating exchange rates will be not over-valued or under-valued as according to willingness to buy and sell.Floating exchange rates also have disadvantages:At first, the volatility and instability will occurs that the growth or even destroy international trade.In addition, floating exchange rates is difficult for long term trade and contracts.The last, floating may make governments think they need to do nothing to cope with inflation.11 outline three effect on individual and three effects on businesses for each of two exchange rate regimes selected in question 10.For the floating exchange rates:There are some effects on individuals:The first one is that the costs of buying imported products can vary; if the currencyexchange rate rises, the more people are willing to go abroad, but if the currency exchange rate declines, less people want to go overseas.On the other hand, more individuals want to take speculations;What’s more, the costs of changing currencies may be greater than under the fixed exchange rate.There are some effects on business:At first, the business may face great uncertainty for its long-term contracts and investments;Besides, the ‘Hot Money’ could bring great damages to the busi nesses;At the same time, it will influence a company’s profit. (Because the quote from the final payment under the order to have time interval, although the period in which the exchange rate changes, but only subject to the payment of a specific period of time in exchange rates. Margins may be reduced)The effects of the fixed exchange ratesIn terms of the individuals:Firstly, it is quite stable and gives the consumers great certainty and confidence.Moreover, if the currency exchange rate rises, it will lead to the decline of the domestic price level, so the imported goods will be cheaper for consumers; if the currency exchange rate declines, it will lead to the addition of the domestic price level.In the end, if the currency exchange rate rises, it will benefit import rather than export, therefore when the economy is depressed with its unemployment; many governments sometimes decline its exchange rate in order to add the national income and employment.In terms of the business:At the first, it decreases great uncertainty; therefore, it’s good for businesses’ long-term investment or plan.What’s more, if the currency exchange rate increases, it will benefit import rather than export; the businesses can get more imported materials at a cheaper price;At last, if the currency exchange rate declines, it will benefit export rather than import; the businesses can sell more goods and earn great profits.12 explain two characteristics of either Newly industrialized Countries, or Less Developed Countries.Newly industrialized CountriesAt first, Newly industrialized Countries establish a education and training are that usually very modern and make great use of new technology as do their Health Establishments. That is to say, the way can more save time and more reasonable to education and training.On the other hand, Newly industrialized Countries are very good at innovating and introducing new methods and management techniques. The way can meet some customer s’ needs for innovation and technology.13. Using specific examples provide an analysis of one issue facing NICs, and one issue facing LDCs.In the NICs there are many question of indebtedness, because taking a new road of industrialization must be large industrial claim, the pre-investment will be very great. So the country in order to change economy will spend a lot of money, easily lead to debt crises.In the LDCs exist educational problems, many children can not accept formal education, because these LDCs have not enough resources and facilities, on the other side, the parents don’t have the sense of importance of education, which causes the younger generation is same with the last generation, and then the development of the country would be stopped.14. Explain the impact of transnational firms on NICs or LDCs.The transnational firms in LDCs could increase income, bring more jobs and economic growth and so on. For example, Inter invests 0.375 billion dollar to build a factory in Chengdu of China, which can offer around 3000 jobs. Inter can attract relevant enterprises come to Chengdu to develop the IT industry of Chengdu. And Inter Company operate internationally with large volume of importing and exporting, which can promote the development of delivery industry.Besides, transnational firms some project investment can help less developed country to develop industries, education and health care industry.Reference: (available at: 2012) /wiki/%E8%8B%B1%E5%9B%BD%E7%BB%8F%E6%B5% 8E accessed 2014/5/1Appendix:。

世界经济

Economics 2: The World EconomyContents: Introduction (3)1. Trading internationally (3)2. Free trade (3)3.Absolute advantage and Comparative advantage (4)4. Protectionism (4)5. Two barriers to trade (5)6. The role of WTO (5)7. The role of European Union (6)8.Balance of payment (6)st 30 years’ general trend of trade in UK (7)10. Exchange rate affects the Balance of Payments (8)11. The Single currency for UK (9)12. Effects on individuals and businesses (9)13. The two characteristics of LDCs (9)14. The two issues currently fac ing LDCs (10)15. The impact of multinationals in NICs and LDCs (10)Conclusion (11)Reference (11)IntroductionI, as a member of the government of a nation on the periphery of Europe, will give some detailed information about international trade and the role of trade organizations such as the European Union (EU). I want to persuade the Premier of my country to join the EU.1.Trading internationallyIn any industrial or newly industrialized country, international trading plays a much important role in the national economy. The gains from trading internationally are shown below:1)Efficiently using global resources, enriching and facilitating people’s life. Throughtrading internationally, we can purchase materials and other goods from othercountries at a quite lower price, this can reduce our cost of producing products, and our people can buy more kind of goods just in domestic shops.2)Making the enterprises of Berce become more competitive and full filled withinnovation spirit. Since international trading is trading between different countries, companies from other countries will occupy the international market with ourcompanies. In order to facing these challenges, our companies should makechanges to adapt the global market, and this will help them establish theinnovation spirit and the companies will be more competitive.3)This is also a good chance to raise our international standing. International tradingcan not only bring us wealth, but also bring us the opportunity to be known bypeople throughout the world. We should make use of international trading toparticipate in the international activities, so that our national power can be shown and developed.2.Free tradeFree trade must be equal to every country because its intention of establishment is to exchange goods and services between countries freely with no barriers and political prejudice. Actually purely free trade is neither existed between countries of different system nor between countries of the same political system because of their different benefits and territorial sovereignty.The Free Trade Agreement between New Zealand and China (NZ-China FTA) entered into force on 1 October 2008. The aim of this Agreement is that this agreement allows for mutually beneficial concessions in the area of trade of goods, services and investment. It liberalises and facilitates trade in goods and services, improves the business environment and promotes cooperation between the two countries in a broad range of economic areas. The liberalising of goods and services will be supported by the free trade policy at the same time legislation will be perfect through current trade. This is the first time that China signs free trade agreement withdeveloped countries. China and New Zealand will get more friendly relationship and tangible benefits to both countries.parative advantage and Absolute advantageAbsolute advantage is said to occur when one country can produce a good or service to a pro-determined quality more cheaply than another country. The theory of comparative advantage is the original basis for international trade. We can judge whether the company has comparative advantage from the opportunity cost. If the opportunity cost of producing one good is lower than another country, this company has comparative advantage in that goods.For example: Consider two countries producing two products — wheat and oats. With the same factor resource evenly allocated by each country to the production of bothAccording to above data, Italy has absolute advantage both in wheat and oats production. The opportunity cost of producing 1 oats is190/13 in UK which is less than the opportunity cost of producing 1oats of 50/3. So UK has the comparative advantage in producing oats over Italy. We can see that oats is cheaper in UK than in Italy. So UK has comparative advantage in oats. So UK can specialise oats to produce more oats to get high yields, namely high efficiency. In order to maximum efficiency, UK can use high- tech and human resource to improve its industry competes and eventually produce more and cheaper oats.4.ProtectionismProtectionism is the economic policy of restraining trade between states, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign take-over of local markets and companies.One reason for protectionism is protect against dumping. China's Ministry of Commerce announced Monday that it will maintain anti-dumping measures on some imported polyvinyl chloride from Sept. 29. The anti-dumping measures target PVC, one of the most widely used materials in the chemical industry, imported from the United States, the Republic of Korea, Japan and Russia. According to the ministry, the period will be five years. China launched anti-dumping measures on PVC from those countries in 2003 for a period of five years, and launched an investigation into ending of the measures in September 2008.The other reason is to protect domestic employment. The US government gives its peanut farmers subsidies because they might go out of business. The reason is that peanut butter is popular in the US while some countries can provide peanuts at a verylow price because the climate is suitable and the labour is cheap and they may sell their product to the US.5.Two barriers to tradeTrade barrier is a general term that describes any government policy or regulation that restricts international trade. The barriers can take many forms. Here gives two examples:Tariff: Tariff is the most well known barriers to trade. A tariff is a tax on goods upon importation. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid, it is the easiest tax to collect, and the cost of collection is small. For example, The UK used to have a special tax levied on imported cars, which in order to protect the UK automobile industry from international competition.Embargoes: An embargo is the prohibition of commerce and trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative.From the beginning of the Cold War, in order to against USSR and other socialist states, the USA carried out embargoes to those countries as an important weapon.6.The role of WTOThe world Trading Organization (WTO) was set up on 1st January 1995. WTO is situated in Geneva and had taken the place of the General Agreement on Tariffs and Trade (GATT) when it came into being. The WTO, play a role of a Multilateral Trade Organization, charges goods, services and intellectual property rights. If a country wants to join the WTO, it should follow the norm of reciprocity and most-favored-nation (MFN) status. Rules of WTO are humanized because it allows temporary safeguard taken place for short-term-balance of payments.The WTO is a dispute settler, and it can lower trade barriers among its members. WTO also apptmps to be a policy body promoting free trade. The conflict between Washington and Brussels over aircraft was settled down in order to avoid an escalation of the conflict to the level of the WTO.7.The role of European UnionEuropean Union (EU) is an economic union, which is characterized by abolition of tariffs and quotas among members, common tariff and quota system, abolition of restrictions on factor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The purpose of all these areto promote and smooth free trade among internal European Union. For example, in the New Neighbor Initiative, (also known as Wider Europe) which was launched in 2002, EU tried to strengthen its relationship with its neighbor countries, such as Ukraine, Russia, and Australia.8.Balance of paymentBalance of Payments is a government accounts that tracks exports and imports of goods, services and assets of a country in a specific time period. There are three main sections of the Balance of Payments. They includes the current account which consists of trade in goods and services, income and current transfers, and the balance account and the financial account which is the flow of direct portfolio and other investment and reserve assets.As can be seen from this table of balance of payment covering 1992nto 2002 is that the current account includes trade and goods, income as well as current transfers, inwhich although the trade and goods has had the surplus of 186 in 1997, then still existed an deficit, especially in 2001 and 2002; and the income still has an increase that reached a peak point at over 20 pounds billion in 2002; current transfers have fluctuated but are showing an increasing deficit. This trend to illustrated that the risen of surplus in income was having a beneficial impact on the current account balance. The capital account has still rising, which means there existed the trade surplus, while the financial account has going into deficit in 1997 but quickly received and was strongly in surplus in 2000 and 2001. The last one is the net errors and omission has fluctuated either. All of those will clearly reflect what is occurring in the four elements which together form the UK balance of payments.st 30 years’ general trend of trade in UKSome people say that the balance of payment is no longer the main indicator of the health of the UK economy. Besides, Net Errors and Omissions can also indicate the health condition of UK economy. The United Kingdom has changed its absolute industry from manufacturing in the 1970s to service-based country depending on technology. British industries now fairly export goods except high-tech products for the scarcity of resources. Because exports service is easier to end in surplus in the balance of payment. Many UK organizations such as BP, ICI have moved production or some of it out of UK to countries that factors of production are cheaper and do service exportation. This action may influence financial account of UK and income will be put into current account. Capital account of UK would be affected by the move in of foreign manufacturing set ups such as Nestle and Mitsubishi.UK has been in deficit in Trade in Goods and this deficit has also grown for the last thirsty years.During the last thirsty years, UK has concentrated on services and technology, so trade in goods and services are imbalanced. France and German, which are UK’s main exportation country, have large unemployment and low economic growth, so exportation is much lesser than importation. Consequently, trade in goods in the current account is in deficit. For example, in 2005 the export of oil is 19,794M and the import of oil is 21,989M. The deficit just in oil is -2,195.Trade in service of UK is in surplus from 1979 and this surplus is getting greater year by year. This may due to UK government grants money to nation industries to development technology in order to make its services more competitive to other foreign ones. And UK government also set barriers to protect its national service industry. Thus, surplus in trade service in current account is existed and grow larger. For example, the export of financial service is 15,644 and the import of it is 3,314 and this result in a surplus of 12,330.Even though there is surplus in trade in services, the current account is still in deficit because the surplus cannot offset the large deficit in trade in goods. They have to balance their current account by capital account which has shown steady surplus growth. In this situation, UK confidently have the ability to make steady surplus growth in both capital account and Trade in Service in order to make up the deficit of trade in goods and eventually they always make it. So UK is thought of a successful financial sector.10Exchange rate affects the Balance of PaymentsIn finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. Its effect on balance of payments based on its relationships with other currencies and how its value will change.For example, a Chinese corporation manufacture screen for a television firm in the UK. The costs is ￥15 million. The rate of the ￡to the ￥is ￡1 to ￥15. Costs to the UK firm is ￡1 million. The rate changes to ￡1=￥12, which means the Yuan is stronger and the costs of the screens to the UK firm is now 1.25 million. The English company may judge the extra ￡0.25 million is valuable or not and consider this to be too expensive and look elsewhere for a cheaper alternative. If the value of the Yuan then falls to￡1=￥16, then the cost to the English firm will be￡0.94 million and they are likely to purchase more at this cheaper price.The above example explains the effect that falls and rises in the value of a country’s currency can cause. That is to say, if the value of currency rises, imported goods will be cheaper, therefore the trade in goods is likely to move into deficit. Inflation may be lower because domestic firms may reduce prices. The price of the imported raw materials may go down again and affecting the trade aspect. In addition, consumers may find it easier to buy imported goods, and foreign investment may increase because profits sent back will be worth more in their domestic currency. If the value of a currency falls, the domestic goods and services will be cheaper both in foreign and domestic markets. A country which has reduces the value of its currency would certainly be looking to sell more abroad. It will have a positive impact on exporting which means an improvement in Trade in Goods. On the other hand, it could encourage firms and individuals to invest abroad in that the foreign currency earned will be worth more when sent back to the domestic market. In a word, exchange rate affected current account, capital account, financial account, sometimes, exchange rate also affected net errors and omissions account, so, exchange rate can affected balance of payment.11.The Single currency for UKUsing single currency in EU, international traders and travelers can reduce transaction costs. Without currency transaction fees, people prefer to travel more often because their travel expense will be lower. And international traders can reduce production costs so their products or services will be more competitive in price and enlarge market share. Using single currency in EU can also lower interest rates. Stabilized interest rate means low inflation. Diversify financial risk caused by economical operations. With a large economic scale after joining the EU, inflation risks can be reduced.Contrarily, there are also some disadvantages to the UK economy. UK may lose its independent monetary policy if it joins the single currency. If a country loses its monetary autonomy, it can’t control its monetary market and disable to settle economic shocks. UK’s fixed interest system can not fit the variable rate system, so joining the single currency may make UK lack of convergence of EU economy. So, probably due to these series of problems may face, UK still do not use Euro.12.Effects on individuals and businessesEffects on individuals: entering into the single currency can bring some advantages. Such as Euro zone countries. (1) It is convenient for them to travel to euro zone countries, because they need not to exchange currency. (2) It is easier to compare the price of products when they are shopping.Effects on businesses: (1) it is easier to bring in foreign investment, because market size reduced uncertainty. (2) It keeps interest rates lower, which is beneficial to improve and advance business.13.The two characteristics of LDCsLess developed countries that are not fully industrialized or do not have sophisticated financial or legal systems. These countries, also called members of the Third World, typically have low levels of per-capita income, high inflation and debt, and large trade deficits. There are some characteristics of less-developed countries. Take Bangladesh for example, it has high birth rate because of lack of birth control plan. It is the root cause of lack of education. As well as, it has high unemployment as employees are shortage of professional skills. Furthermore, it also lacks of capital. There are no resources to purchase equipment and little expertise to use it if there were.14.The two issues currently facing LDCsNepal is one of the world's least developed countries, but also a typical agricultural country. Agriculture is the economic lifeline of Nepal is Nepal's largest industry, its output value accounts for 39.6% of the national GDP. 80% of the people's standard of living depends on the development of agriculture. Among them, Terai area of 2.13 mu per capita arable lands, mountainous area of arable land per capita is only 1.12 mus. Grassland accounts for 15%, mainly used for animal husbandry. The level of agricultural production is very low, basically in the self-sufficient state of the economy. It explains that Nepal’ land is very ineffectively used and its productivity is low. There are normally no modern techniques or equipment available. They have no advanced technology to improve its productivity.The underdevelopment trap. The LDCs are facing the vicious circle of poverty which they cannot overcome. For these LDCs, for example Bangladesh, an increase in productivity requires the rate of capital accumulation to increase but investment can only increase if savings rates increase which can only increase if income increases. Income cannot increase unless productivity increases. This is a circular argument.15.The impact of multinationals in NICs and LDCsBenefits (good impacts)1)Force the domestic industries to modernize. After the multinational firm come intoa country, the domestic industries will probably feel competition stress and thiswill make them make changes to avoid being washed out. Since the Unilever came to China market, the Chinese domestic cosmetics companies had developed faster than before.2)Promote the employment of the host countries. Nike Company set its manufactoryin China, can surely hired a number of workers to work. This can reduce the local unemployment in some standard.Problems (bad impacts)1)They may make abortion of the small companies of the host countries. Because oflacking competitive, the local small companies are not possible to compete with the multinationals. For instance, after the Unilever and the P&G enter Chinese market, large number of new established cosmetics companies became bankruptcy.2)Environment of the host countries may be polluted. Since many of themultinationals are chemical industry, the running in the host countries may make terrible pollution to the environment. For example, the Pepsi Company waste water disposal out of gauge while producing in China.ConclusionFrom above information we can see that joining the EU has so many benefits to our nation, the people and companies. Our nation can benefit from low trade barriers in international trade with EU countries. More MNCs will invest in our country which can bring high technology and capital to enlarge our capital market. So I, as a member of government, hope the Premier to think about this suggestion.Reference:Economics 2: the world Economy published by Scottish Qualifications Authority/economies/gsce/revision/article/ALeqM5iOvLw9vmN24g2I5gX85IZKPB3jIw/wiki/Protectionism/forum/Forum14/HTML/000025.html/report.php?ac=view_report&report_id=367/doc/1G1-149508931.html/downloads/theme_economy/PinkBook_2008_final.pdf /2006/12/high-birth-rates-in-africa-contribute.html /burmese/archive/2007-01/2007-01-25-voa3.cfm/ldcs/issues/index.html#2/site/IMG/pdf/ldcwatch_press_release_1.pdf。

HND Economics 2 The World Economy世界经济学报告

Economics 2: The WorldEconomyReworkContentIntroduction----------------------------------------------------------------3 Section 1: International TradeThree gains from trading internationally---------------------------------------3 Free Trade--------------------------------------------------------------------------3 Absolute and Comparative Advantage-----------------------------------------3 Protectionism----------------------------------------------------------------------4 Barriers to trade-------------------------------------------------------------------4 WTO and EU----------------------------------------------------------------------5 Section 2: International FinanceBalance of Payments and General trends in UK Trade----------------------6 Relationship between the exchange rate and the balance of payments—14 Single Currency------------------------------------------------------------------15 Effects on individuals and business of the Euro-----------------------------15 Section 3: Less Developed Countries (LDCs)Characteristics of a LDC--------------------------------------------------------16 Current issues that face LDCs--------------------------------------------------16 The impacts of multinationals on LDCs and NICs--------------------------16 Conclusion-----------------------------------------------------------------16 References------------------------------------------------------------------17Introduction:As a member of the government of nation on the periphery of Europe, it is my obligation to illustrate the benefits of joining the EU to the Premier. In this report, I will analyze 15elements in next three parts to make a clear explanation of benefits of joining the EU.Section 1: International TradeThree gains from trading internationally:To begin with, the international trade could increase world out-put. The tendency of globalization brings the firms more opportunities to gain the labor, resources, contracts and new technology. The supply and demand will be improved with the improvement of company’s productivity.Once the supply has been improved, the goods and services were produced at lower cost and there are more and more competitions, the price of the product might fall which means consumers could get more choices and cheaper goods.In addition, the most important gaining of international trade is it can generate economic growth. Free trade could increase sales, profit margins, and market shares and the both demand and supply level has updated. Meanwhile, the producer needs more resources, labor and capital to produce more to satisfy the global market. It direct result in improving the material market, finance market, and may decline the unemployment rate.Free tradeFree trade is a concept that there is no barrier to goods and services exchanged between countries. Since different countries have different terrain, weather, resources and technology, the international trade would bring the goods which are more valuable than the local people produce it by themselves.A good example for free trade is in Nov.18, 2004, Chinese President and Chilean President declared the start of the FTA negotiations. According to the agreement, the two countries would start tariff reduction of goods trade from July 1, 2006. Tariff of products accounting for 97% of the total of the two countries would be zero in ten years. China and Chile would carry out free trade in education, science & technology, environment protection, labor, social security, IPR, investment and promotion, mineral and industry. This agreement has promoted the free trade between China and Chile successfully.Absolute and comparative advantageAbsolute advantage refers to the ability of a particular person or a country to produce a particular good with fewer resources than another person or country. Absolute advantage is said to occur when one country can produce a good or service topre-determined quality more cheaply than anther country. It stands contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost. Opportunity cost is defined as the cost of choosing a good or service measured in terms of the next best alternative given up. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in term of other goods is lower in that country than it is in other countries. Example: Korea and Japan have following production possibilities for two commodities, mobile phones and computers; assume that all the resources owned bythe advantage it has is much greater for mobiles. Using the same resources as Korea it can make twice as many mobile phones.For Japan the ‘cost’ of 1 Mobile phone is 10 bales of Computers, i.e. 20000/2000For Korea it is 15, i.e. 15000/1000But if we look at the case of computers we will find that here for Japan the cost of a bale of computers is one-tenth of a Mobile phone while for Korea it is one fifteenth. In terms of the output of Mobile phone foregone (opportunity cost), computer is cheaper in Korea than Japan. Korea has a Comparative advantage in computer while Japan has comparative advantage in mobile phone.ProtectionismProtectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over or competition.Here are two examples of protectionism:1: Britain imports bananas from its ex-colonies in South America while USA owns huge banana plantations in South America. In 1999 Britain refused to import bananas from South America, so the US government slapped tariffs on some British-made goods. The most serious one was a punitive tariff of 100% on Scottish wool products in order to limit the import from Britain.2: Another example of protectionism is in January, 2009, American government settled a policy that only the American steel can be used in America. The American government tended to use this policy to reduce the loss in financial crisis and it helps the steel workers to keep their jobs. In this example, protectionism protects the domestic lower-skilled labor and domestic industries.Barriers to tradeTo protect a country’s own industries, the country which in adverse side need to find some ways to be barriers to limit the import products, usually, the two methodsare—tariff and non tariffs.Tariff is taxes or customs duties placed on foreign products to artificially raise their prices and this hopefully, suppresses domestic demand for them. This tax may be ad value, that is, a percentage of the price of the goods or specific, that is, a tax per unit of weight or physical quantity.For example, in January 12, 2009 the Russian government raised the expropriation tariff (up to 30 percent) for the cars import in the next nine months. The import car’s price will be increased to be WP (price for the whole world) adds the tariff, since the price is increasing, the sales of the import cars must fall down. The customers might choose the Russian car instead of import cars since it is cheaper.Non-tariff barriers traditionally have been actions such Quotas, embargoes, exchange control and import deposits. Probably the best known of these is the quota. This is a physical limitation on the quantity of import. Quota is a physical limitation on the quantity of imports which had been acknowledged by local laws. Usually the importers need to apply to pay for a license to sell goods.For instance, Russia uses another method to limit foreign car import since 2008—to limit the quantity of import; only a few companies which have the import license could import cars and have a selling upper limit. Russia uses these methods to restrict the import quantity, and during the government limited foreign goods import, it can promote the domestic industries.WTO and EUIn 1948, the General Agreement on Tariffs and Trade (GATT) was established by the developed countries. In 1 Jan 1995, the GATT was supplanted by a new institution, the World Trade Organization (WTO) and aims to improve trade and investment flows around the world. It is an international body seeking to promote free trade by opening markets through the elimination of import tariffs. The organization administers trade agreements, monitors international trade policy and acts as a forum for trade negotiations. The four main goals of WTO are: freeing global trade through universally lowered tariffs, imposing the same rules on all members in order to homogenize the trade process, spurring competition through lowered subsidies, and ensuring the same trade concessions for all member nations. The WTO also provides technical assistance and training for developing countries. WTO aims for equal representation among members by granting each member country "most-favored nation" status; when a member country bestows a trade privilege on another nation, the privilege must be extended to all other member countries. Another tenet is "national treatment," which behooves countries to treat foreign imports equally with those produced domestically.The best example for joining the WTO is the join of China in 2007, after that, China achieves lots of benefits from the decrease of tariff, limitations and the simplification of trading procedures.EU stands for European Union and is an economic union, which aims to abolish tariffs and quotas among members, common tariff and quota system, restrictions onfactor movements and harmonization and unification of economic policies and institutions. It draws out regulations, monitors member states, solves disputes and problems among member states and negotiates with other countries or international organizations on the behalf of EU members. The European Union aims to promote and smooth free trade among internal European Union and initiatives for simplifying national and community rules include simpler legislation for the internal market (SLIM) and European Business Test Panel. For example, in Oct 16, 2009, EU and Korean government signed a free trade agreement of 100 billion US dollars after two years’ negotiation and EU will cancel the tariffs on imports of textile and cars from Korea in the next three years. This will promote the free trade of EU and have positive impact on the economy.Section 2: International FinanceBalance of Payments and General trends in UK TradeBalance of payment is the name given to the record of transactions between the residents of the country and the rest of the world over a period of time. It is a key economic statistics and UK’s Balance of Payments is comprises by the current account, the capital account, the financial account which deals with flow of direct portfolio and investments and reserve assets and the International Investment Position which shows the Stock of External Financial Assets and Liabilities. The chart below shows the composition if Balance of Payments in 2008:a) The current account can be divided into four categories: trade in goods, trade in service, income and current transfers. Positive net income from abroad corresponds to a current account surplus; negative net income from abroad corresponds to a current account deficit.Here are the trade figures of recent years:Here are the Current Account Balance Chart and the Chart of trade in Goods and services of UK in last 20 years.The current balance has usually been in deficit over the last 30 years.The UK has recorded a current account deficit in every year since 1984. Prior to 1984, the current account recorded a surplus in 1980 to 1983. From 1984 to 1989, the current account deficit increased steadily to reach a high of 25.5 billion pounds in 1989, equivalent to -4.9 per cent of Gross Domestic Product (GDP). From 1990 until 1997, the current account deficit declined to a low of 1.0 billion pounds in 1997. Between 1998 and 2006, the current account deficit widened sharply, peaking at 43.8 billion pounds in 2006. This was the highest recorded in cash terms but only equated to -3.3 per cent of GDP. In the past two years, there has been a reduction in the current account deficit –in 2008 it currently stands at 25.1 billion, equivalent to -1.7 per cent of GDP.It is obvious that UK had a large deficit in trade of goods in the last 30 years and the deficit becomes lager and increases greatly from 1998 to 2008 while the surplus of trade in service grows smoothly but not as markedly as the goods deficit. The trade in goods account recorded net surpluses in the years 1980 to 1982, largely as a result of growth in exports of North Sea oil. Since then however, the trade in goods account has remained in deficit. The deficit grew significantly in the late 1980s to reach a peak of 24.7 billion in 1989, before narrowing in the 1990s to levels of around 10 billion to 14 billion. In 1998 the deficit jumped by over 9 billion, and it has continued to rise since, reaching a cash record of 92.9 billion in 2008.There are two different of Income—Direct Investment Income and Portfolio Investment Income. The Direct Investment Income means the profits earned by UK companies from overseas branches and associated company. And the Portfolio Investment Income is the interest on bonds and dividends, held abroad by UK companies and residents.Here are charts of income over the 10 years:The income section has shown positive growth from 2006 to 2008 and is very much in surplus recently.As for the current transfer, it also has two different parts:The taxes, payments and receipts to the EU, Social Security Payments abroad, and military expenditure abroad is the Central Government Transfer. And for Other Sector Transfers, it includes receipts from the EU Social Fund, taxes on income and wealth paid by UK workers and businesses to foreign governments, insurance premiums and claims.There is the Chart of Current transfer in last 10 yearsThe transfers account has shown a deficit in every year since 1960. The deficit increased steadily to reach 4.8 billion in 1990. In 1991, the deficit reduced to 1.0 billion, reflecting 2.1 billion receipts from other countries towards the UK’s cost of the first Gulf conflict. The deficit has since increased, to reach a record 13.6 billion in 2008.b) Compared with Current Accounts, the composition of the Capital and Financial Account is more complicate.Capital Account has two categories:Capital transfer: It is investment grants by the government and debts which the government has agreed with the creditor do not need to be met.Acquisition and disposal of non produced/nonfinancial assets: Purchase or sales of property by foreign embassy or patents, copyrights, trademarks, franchises and leases.The capital account has shown strong steady surplus growth especially from the year of 2006 to 2008.The financial account has four categories and here are the charts of the four categories over the last ten years:According to these graphs, investment increased dramatically from the mid-1990s, reflecting the increased globalization of the world economy. Between 2000 and 2007, other investment dominated cross-border investment, primarily banking activity. In 2008 however, other investment, has recorded net disinvestment as the global financial crisis deepened leading to a reduction in loans internationally and a repatriation of deposits. In recent years, including the latest, the UK has needed to borrow from abroad to finance a continuing current account deficit, which has resulted in inward investment (UK liabilities) exceeding outward investment (UK assets).c) The international investment position is the balance sheet of the stock of external assets and liabilities. Between 1966 and 1994 the UK’s assets tended to exceed itsliabilities, by up to a record 86.4 billion pounds in 1986. But from 1995 to 2007, the UK recorded a net liability position in every year, reaching a record 352.6 billion pounds in 2006. In 2008, the UK returned to a net asset position of 92.9 billion pounds mainly due to exchange rate effects.The chart below indicates UK’s international investment position:Relationship between the exchange rate and the balance of paymentsThe exchange rate is the price of a currency in terms of other currencies. Its effect on balance of payments will depend upon its relationship with other currencies and how its value will change. As the currency weakens (devalues) the exports will become cheaper abroad but the country has to pay more for imports but the goods and services would become internationally cheaper and lead to more goods a services being purchased. If demand remains the same then the value of goods and services to the country will reduce and the current account balance may deteriorate. If the exchange rate rises then the country’s goods and services might suffer and demand from abroad could fall. If the demand remains the same however then the value of exports will rise and the current account balance should improve.For instance, when the UK market needs to import American goods (such as corns) the exchange market in UK would be the demand of U.S dollars is larger than the supply of UK pounds. If the American markets needs import more British goods, they need to exchange more pounds in the currency market, so the both of demand of US Dollar and supply of UK Pounds is increasing, meanwhile, the exchange rate of ￡/＄is increasing. UK pound is more valuable means the goods of UK are usually more expensive and American people need to spend more US dollars compared to thesame amount of pounds. That is why the currency exchange rate is so important for the balance of payments. For example, if the exchange rate of ￡/＄is increasing, the American business man might not choose UK goods, because of the high price. Single CurrencyEuropean single currency Euro came to exist since 1999. There are 12 member states of EU who use Euro while UK is still not one of the members since there are both advantages and disadvantages to join it.Advantages:At firstly, the single currency reduces the exchange rate uncertainty because people don't have to convert money from one currency to another when purchase goods. Meanwhile, using the single currency will increase foreign investment such as direct inward investment since the reduction of uncertainty. Then it may produce a great transparency. Whether people buy or sell goods, consumers can compare price in a single currency. It will help to decrease the scope for price discriminations and create pressure to lower the price. Moreover, it could maintain interest rate lower and the commitment to low inflation should allow economies to operate with lower cost. Disadvantages:A country may lose the independent monetary policy if it joins the single currency. The single currency forces a country to forgo an independent monetary policy. After the single currency has been used, the country's monetary policy will determined by the supranational central bank and not by the domestic central bank. This is why the theory of optimal currency areas emphasizes the importance of flexible prices, labor mobility and fiscal transfers. Flexible prices and labor mobility become more important when a currency union exists; governments have an incentive to make markets work more efficiently.Besides, there are also political costs to the country. If the government loses control over monetary policy to the supranational central bank, politicians are limited to using fiscal policy to influence economy.Effects on individuals and business of the EuroAs for the individuals,they can get lower prices and higher quality goods and services when they have more choices due to increased competition among companies through the Euro zones; they can measure the good price through Europe and choose the best one. In addition, single currency reduces the transaction costs of traveling in Europe. Individuals could travel more frequently than past since it is more convenient and cheaper. People do not need to concern the exchange rate and commission fee when visiting the other countries in Europe.As for the business, people could avoid the exchange rate risk and traders do not need to waste time and cost on purchasing foreign currencies. Moreover, the business market could be expanded there are more opportunities.Section 3: Less Developed Countries (LDCs) Characteristics of a LDCLess Developed Countries (LDCs) mainly exist in Asia and Africa. Most LDCs’subsistence is agriculture. The land of LDCs is very ineffectively used and is very low in productivity, there are normally no modern techniques or equipment available, and the land is always threatened by floods or droughts. The birth rates in LDCs are very high but there is very heavy infant mortality since the health care system is poor.A good example for LDC is Angola. A 2007 survey concluded that low and deficient niacin status was common in Angola. Many regions in this country have high incidence rates of tuberculosis and high HIV prevalence rates. Angola has one of the highest infant mortality rates in the world and one of the world's lowest life expectancies.Current issues that face LDCsThe World Bank offers aid programs to Angola to support the health care system of Angola to reduce the infections of HIV but the aid programs they get from the World Bank of IMF carry conditions which they feel are difficult to comply with, and are expensive.Besides, the indebtedness of Angola keeps increasing year on year. This makes Angola almost impossible to borrow more.They borrow a huge amount of money to develop their economy, purchase foreign goods and service. However, the high interest or other factors make debts become a great stress on LDCs. They are in the trip of debts, which prevent the development of their economy.The impacts of multinationals on LDCs and NICsNow days, there are more and more multi-national firms which have branches in various countries since it can reduce the labor, material, transport cost. Companies from newly industrialized countries tend to be MNCs. A good example for multinationals on NICs and LDCs is Great Wall Computer Corporation from China. This company invests 120 million dollars to build a new factory in Algeria to expand its market and increase 34 percent of its foreign sale income. The company offers more jobs to the people in Algeria thus increase the employment and income of Algerian. The company also brings new technology to this less developed country. However, the company transfers most of profits back to China and uses their financial strength to impose their will in host counties either.ConclusionAfter analyzing these 15 elements, you may have a clear acknowledge of the international trade, finance and LDCs and as for the economic environment of the whole area, it can be benefit to join the EU. It will enhance our country’s economic growth by attracting more free capital, using single currency and enlarge the market.References:Web research:/downloads/theme_economy/PB09.pdfRelated Web sites /wiki/Protectionism/eurocash.asp/Book resource:The Economics 2: The World Economy: Higher National Diploma. Scottish Qualifications AuthorityUnited Kingdom Balance of Payments the Pink Book 2009: Office for National Statistics。

【专业介绍】中央财经大学研究生专业介绍：世界经济学

学科概况世界经济学是理论经济学一级学科下属的二级学科之一，世界经济学是一门前沿性和综合性很强的理论经济学。

它研究当代正在走向全球化和地区经济一体化的全球经济的运行绩效和机制变迁的机制规律，同经济学、政治学和管理学等相辅相成，为建立公正合理的国际经济新秩序，为在平等互利的基础上扩大和加强世界各国和地区的经济贸易关系提供决策依据。

世界经济学是基于经济学原理，借鉴政治学、管理学、社会学、国际关系学，并融汇文史哲以及地理类的专业知识，从现实经济出发揭示新的理论和发展规律。

专业培养目标本硕士点培养具有坚定正确的政治方向和良好的道德修养，思维创新，治学严谨；系统掌握世界经济的基本理论和专业知识，了解本专业的前沿动态，尤其关注全球化背景下世界经济的热点问题与发展趋势；掌握至少一门外语，能熟练阅读本专业外文文献；具备从事世界经济理论与政策研究、高等院校教学和外经贸实际工作能力。

就业方向就业前景：总体来说世界经济的就业面相对比较广泛，只要学生在学校期间脚踏实地的专修自己的专业，提高各方面的综合能力，找工作不成问题。

世界经济在全球的经济范围内进行运转，所以全球的整个宏观经济形势可以对此专业的毕业生就业产生直接的影响。

如今，经济全球化的步伐加快，跨国公司的不断扩张，也因此增加了对该专业专业知识较高的复合型人才的需求，但是就业的门槛也较高，既需要有坚实的理论基础，还要有丰富的实战经验，所以毕业生应调整自己的就业观念，放低自己的要求，从基层做起，积累经验，从而做好自己的职业规划，毕业生可以考取经济类相关证书提高自己。

就业去向：1、银行、证券公司从事相关工作2、国际投资机构和国际性服务行业从事商务管理工作3、外贸公司、跨国公司4、律师事务所从事相关工作5、或在科研和教学机构从事相关领域的研究与教学工作。

6、考博，出国深造。

HND课程

Financial Reporting and Analysis
财务分析报告
Information & Communication Technology in Business
信息与通信技术在商业中的运用
Management Accounting for Decision Making
管理会计
Statistics for Business
经济学２：世界经济
DE3H 35
Information & Communication Technology in Business
信息与通信技术在商业中的运用
DE3K 35
International Marketing：An Introduction
国际营销导论
DG6M 34
Marketing Research Applications
Unit Name
商务会计商法导言交流：分析与演示复杂的交流技巧客户服务文化构建经济学议题简介经济学 1：微宏观经济学信息技术：应用软件１人力与组织管理市场调研市场营销学简介市场营销实务软件包运用市场营销：分等级考试 1
课程名称
DE39 34 DE3E 34
DE3N 34
DJ42 34 DE3A 34 DE3G 35 D75X 34 DE3D 34 DG6T 34 DE3C 34 DG6V 34 D85F 34 DL1E 34 Validated
课程名称
Validated Credit
Code
Value
商务会计商法导言交流：分析与演示复杂的交流技巧客户服务文化构建经济学议题简介金融服务导论信息技术：应用软件１人力与组织管理市场营销学简介个人理财服务保险学原理国际理财：分等级考试 1

HND 世界经济

Report of Economics 2: The World EconomyName:Student Number:Unit Name:Economics 2: The World EconomyClass:GT&B-1Word Count:2454Date:July 6 2015ContentIntroduction (3)1 Free trade (3)4 P rotectionism’ and Barriers to trade (4)5 The role of the WTO in the development of free trade. (5)6 The role of one of EU (5)7 The composition of the UK balance of payments. (6)8 The general trends in UK trade (6)9 How is the balance of payments affected by exchange rates? (6)10 Three advantages and three disadvantages of exchange rates (7)11 Three effects on individuals and three effects on businesses f (8)12 Two characteristics of LDCs (8)13 One issue facing NICs, and one issue facing LDCs (9)14 The impact of transnational firms on NICs or LDCs. (9)Conclusion (10)Reference.................................................................................................. 错误！未定义书签。

经济学报告

The World EconomyName: shaohanStudent ID:Tutor: Xiaojiao OuyangTitle of the Project: Report for Economics 2: The World Economy Word Count:2873Date of Submission: 29/12/2011◇Title: Global Economy◇Abstract:This report mainly represents the development about free trade and economical globalization. It discussed about the basic theories about free trade; economic integration regional and global; balance of payment; single currency; LDCs; MNCs. ◇Keywords:Free tradeEconomic integrationTrading blocsGreen barrierⅠIntroductionAlong with 2008 economic crisis,Global unification of financial markets, which preceded formal global economic unification, raised an issue of the global regulation of the markets. At the same time, this seems impossible without global supranational bodies being in place.This is a dilemma posed in discussions in the main international panels of the world (G8; G20; UN General Assembly): economic integration is both pushed by world economic development and stopped at the political level, including cultural differences between states (e.g., Iran and Israel).However the trend of development is inevitable and back to the original of initial purpose to trade, we will find answer.Ⅱ Free Trade vs. Global Economical DevelopmentA s the scarcity and geographical diversity of resources, trading meets the demand of exchanging necessities and commodities. Nowadays, trading is described as ―global‖, it seems we can enjoy the goods and service trading freely allover the world that can be delivered.·But is it true ?·What make us not?·How long should it take to finally make it?As to find out the answer, the questions had been discussed from three parts:◆Free Trade &International TradeFree trade is essentially a liberal approach to international business. Economic policy-makers implement a trade structure in which goods and products are imported and exported without government intervention..[1]F ree trade is based on the principal of eliminating barriers for exchange and North American Free Trade Agreement create a trade free area.Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008. [2]B ut that is a idealized situation when we discussed about completely trading freely it means there is no barrier and restriction of import or export, it is rarely can be found.I n the real world, as the level of industrialization and technology development divers, when one country can produce a good and service much more efficiently than other countries as using the same resources, this country is said to have an Absolute Advantage.Individual country can benefit a lot from international trades:·Specialization pushes up output and decrease the cost of goods.·Consumers get more choice and cheaper goods and service and living standard increase.·Promotes competition. Domestic company will face the challenges from multi- national companies, it also a chance for them to obtain benefits abroad.G lobal trading markets interact with each other, exchanging products grown or made with a Comparative Advantage. Free trade encourages countries to specialize their economies in order to trade certain goods for maximum benefits with other countries. And comparative advantage is the basis of International trade.This happens as the opportunity costs of exchanging resources will be higher in the country with absolute advantage than it will be in the country with comparative advantage.Example:Suppose there two countries, A and B, that both produce food and clothes. Each country has a unit of resources and both countries use their resources to foodproduction, output will be:·Country A:1000 t·Country B:4000 tIf all the resources use to clothes production, output will be:·Country A:1000 t·Country B:2000 tTo show different opportunity costs, consider the countries produce and sells only domestics’:It is clearly that Country B has an absolute advantage in both commodities, for using same resources Country A it can make twice as many clothes and advantage at food is 4.The domestic opportunity cost ratios.For Country A, the cost of 1 food is 1 clothes.For Country B, the cost of 1 food is 0.5 of clothes, the cost of 1 clothes is 2 food.It show the opportunity cost of clothes is cheaper in Country A than Country B. Country A has a comparative advantage in clothes. So A will produce clothes and B will produce food. And only partially specializing that Country B to fulfill the reduction of clothes.And the total output of clothes is remaining the same but total food producing is increase.◆Free trade &Regional economic integrationF ree trade agreements allow for goods to be imported and exported without taxes and tariffs, making products more affordable for buyers and sellers. Other barriers to international trade such as quotas on imports or subsidies for producers are also eliminated.T here are some reasons why trade is not fully free:·Countries raise barriers as they may fear being swamped by the larger and more powerful neighbor.·Countries want to protect industries as ―Sunrise‖, ―Sun set‖ and―Strategic‖. ·Raise revenue by means of imposing taxes on imports.·Protecting employment in domestic industries and try to move expenditure from foreign to domestic product.·Balance of payment deficit.All above reasons will cause restrictions or barriers to the international trade, that applied to free trade is called as protectionism.* EU subsides on agriculture.EU agricultural policy is constantly evolving. 50 years ago, the emphasis was on providing enough food for a Europe emerging from a decade of war-induced shortages. Subsidizing production on a large scale and buying up surpluses in the interests of food security are now largely a thing of the past. EU policy aims to enable producers of all forms of food - from crops and livestock to fruit and vegetables or wine - to survive by themselves in EU and world markets.But*China's agricultural exports are being stifled by "green barriers" -- import restrictions on the grounds of environmental and food safety issues -- but Chinese farmers are now fighting back with "green" produce.China's tea exports to the European Union dropped by 37 percent last year on an annual basis, which was principally attributed to intensified import criteria -- examination categories soared from six to 62 after November last year. According to figures from United Nations organizations, 7.4 billion U.S. dollars of exports from China covering agriculture and other industries were stifled by the growing green barrier annually.In an effort to deal with the difficulties, China has taken up the challenge to improve its own agricultural structure. "China has pinpointed green food as a vanguard to break the barrier and boost agricultural exports. The development can also greatly improve the agricultural environment," said Liang Zhichao, of the China Green Food Development Center (CGFD). In northeast Heilongjiang Province, China's largest green food exporter, 40 percent of farmers' income growth was realized by developing green food. [4]Due to stimulate trade between and obtain other benefits of economic cooperation, countries that joined together reached kinds of intergovernmental agreement, Trade Bloc. Majority members are part of a regional intergovernmental organizationDepending on the level of Economic Integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions.[5]Some supporters of worldwide free trade are generally opposed to trading blocs, which, they argue, encourage regional as opposed to global free trade. But it remains observed whether regional economic integration is blocking the process of globalization or alternative.T rade blocs can be stand-alone agreements between several states (such as the North American Free Trade Agreement (NAFTA) or part of a regional organization (such as the European Union).EU&Trade Free:The fundamental principles of the EU is the free movement of people, goods, services, and capital, enacts legislation in justice and home affairs, and maintains common policies on trade, agriculture, fisheries and regional development.The found of EU is significant for European economic integration and the members benefit not only from domestic but also global.The European Union's Internal Market (sometimes known as the Single Market, formerly the Common Market) seeks to guarantee the free movement of goods, capital, services, and people within the EU's 27 member states (single market).∙The Internal Market allows not only for the free movement of goods amongst member states, also the free movement of the factors of production. It is intended to be conducive to increased competition, increased specialisation, larger economies of scale, allows goods and factors of production to move to the area where they are most valued, thus improving the efficiency of the allocation of resources.The euro is designed to help build a single market by, for example: easing travel of citizens and goods, eliminating exchange rate problems, providing price transparency, creating a single financial market, price stability and low interest rates, and providing a currency used internationally and protected against shocks by the large amount of internal trade within the euro zone. It is also intended as a political symbol of integration and stimulus for more. Since its launch the euro has become the second reserve currency in the world with a quarter of foreign exchanges reserves being in euro. The euro, and the monetary policies of those who have adopted it in agreement with the EU, is under the control of the European Central Bank (ECB).∙ The Union acts as single player in Foreign Trade and supports the principles of free and fair international trade. As it negotiates with one voice, it can exercise real influence. Together, the European Union's 27 members account for 19% of world imports and exports. Since its technical norms are widely used throughout the world, it often sets the terms of the debate.[7]◆Free Trade & Economic Globalization“Only a free global market and a free global trading system can cope with the global challenges of our time,” said Mr. Renato Ruggiero, WTO Director-General, today (24 April) in Singapore at the World Trade Congress, sponsored by Singapore's Trade and Development Board and the International Herald Tribune. [8]The World Trade Organization (WTO) is established to regulate world trade and covers goods, services and intellectual property rights. It aims to lowering trade restrictions and to settle disputes with a certain procedure.Increase income.The WTO’s own estimates for the impact of the 1994 Uruguay Round trade deal were between $109 billion and $510 billion added to world income (depending on the assumptions of the calculations and allowing for margins of error).More recent research has produced similar figures. Economists estimate that cutting trade barriers in agriculture, manufacturing and services by one third would boost the world economy by $613 billion — equivalent to adding an economy the size of Canada to the world economy. In Europe, the EU Commission calculates that over 1989–93 EU incomes increased by 1.1–1.5% more than they would have done without the Single Market. [9]The WTO contributes to protection and preservation of the environment through its objective of trade openness, through its rules and enforcement mechanism, through work in different WTO bodies, and through ongoing efforts under the Doha Development Agenda. The Doha Agenda includes specific negotiations on trade and environment and some tasks assigned to the regular Trade and Environment Committee. [11]◆The UK Balance of PaymentThe UK Balance of Payments is a account of all the economic transactio ns between the UK and the world. These transactions includes: exports and imports of goods& service; income& financial inflows; transfers.And includes four sections: The Current Account; The Capital Account; The Financial Account; The International Investment Position.Here is a summary of balance of payments in 2009:◆Current AccountCurrent account concerns on income and expenditure and includes four categories: Trade in Goods; Trade in Service; Income; Current Transfer.In 2006 the UK current account deficit suffers a peak at ￡44.9 billion in 2006 and for last four years there has been a reduction in deficit. In 2009, it stands at ￡15.5 billion equivalent to -1.1% of GDP.∙ Since 1966, every year that been recorded for trade in service has been a surplus but there was a decrease between 2008 and 2009 from ￡55.4 billion to ￡49.9 billion. ∙ Since 2000, the balance of income has been in surplus for all years. From 2007, the surplus suffers a deduction as a reduction in net earnings deficit on other investment.∙ Between 1990 and 2000, the deficit for current transfer doubled from￡4.8 billion to ￡9.8 billion. As the currency investment abroad is larger than investment domestic.◆Exchange Rate& Balance of Payment[13] From the chart, UK is using direct quotation as 1 GBP can buy 1.6432 USD. GBP is at a high exchange rate. Japan using indirect quotation as 1 USD can buy 96.57 JPY.JPY is at a low exchange rate.∙ A High Exchange Rate, the GBP is at a high value, means that all areas that are interest bearing will benefit and the Balance of Payment will have a positive impact. Import will become cheaper. Consumers could be import goods easier. Foreign investment will increase as profits sent back worth more than domestic currency However it will cause problem in the Balance of Goods& Service areas as domestic firms may reduce price. The strength of the UK pound makes their product expensive to potential foreign buyers whom will consider buying same commodity elsewhere.∙A low exchange rate, the JPY is at a low value, mean Japan’s goods and service will be cheaper both in foreign and domestic markets which will result an in crease in demand and the domestic firms can benefits more. It means an improvement in Trade in Goods.And it will encourage Japanese companies invest abroad in that the foreign currencye.g. GBP earned will be worth more when sent back Japan.◆Singer CurrencyAs the EMU, EURO can be paid in any countries which are a member of it, but UK pound is not one of them. Here some pros and cons:∙The single currency reduces the cost, Euro countries’individual or forms did not have to do transaction and reduce exchange rate uncertainty.Increase foreign investment free movement of capital and goods among internal market.∙If UK joins in the EMU, it will lose independent from both monetary policy and policy instrument. And changes from GBP to Euro may be costly as equipment and staff train.And single currency will have effects on both individuals and enterprises:∙Euro areas citizens will benefit a lot from single currency, as reduce the cost of transaction. It will be more convenient since there is no exchange rate uncertainty and price can be easier to compare between countries.∙For enterprise that wants to invest in Euro areas, the risk is decrease since there is no exchange rate flotation. Both competition and chances is increase as the free movement of capital and goods.◆MNCAs the development of free trade and the trend of economic globalization, some adventurers broaden their eyesight to foreign market or even global market and Multi-National Firms becoming popular. MNFs are those enterprises that operate not only in one country but also seek out opportunity spread abroad such as Ford, IBM and KFC.It brought both benefits and problems to the host countries. As the case of KFC to China, in the year 2000 the direct contribution made by KFC shows that:∙KFC invested directly 2740 million for the upper stream and low stream sectors and a large quantity of initial demands had been created.∙KFC offered 420 million RMB tax for Chinese government and turned in 325 million RMB taxes for Chinese government indirectly. Plus the direct taxes altogether KFC created 745 million RMB tax revenues for Chinese government.∙ KFC provided job opportunities for 5201 formal workers and 24060 casual laborers. ∙ In 2000, the initial paid-in capital made by KFC brought 520 million RMB capital formations to China which as 50 times more than that in 1992.ⅢConclusionEconomic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state. This is meant in turn to lead to lower prices for distributors and consumers (as no customs duties are paid within the integrated area) and the goal is to increase trade.The trade stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist. [16]。