[ { "slug": "chapter-01-international-economics-is-different", "chapter": 1, "title": "International Economics Is Different", "overview": "International Economics Is Different The introduction to the subject of international economics has three major purposes: Show that international economics addresses important and interesting current events and issues. Show why international economics is special. Provide a broad overview of the book. We begin with four controversies that show the importance of current issues addressed by international economics.", "knowledgePoints": [ "Four Controversies", "Economics and the Nation-State", "What Is a Nation?", "The Trade War of 2018", "Immigration", "Brexit", "China’s Exchange Rate" ], "cases": [ "The first controversy examines the views of U.S. President Donald Trump ...", "Trump’s trade policies and the trade war involve topics that are ...", "The fourth controversy is the exchange rate value of the Chinese ...", "In mid-2015 the U.S. government imposed much higher tariff duties on ..." ] }, { "slug": "chapter-02-the-basic-theory-using-demand-and-supply", "chapter": 2, "title": "The Basic Theory Using Demand and Supply", "overview": "The Basic Theory Using Demand and Supply This chapter indicates why we study theories of international trade and presents the basic theory using supply and demand curves. Trade is important to individual consumers, to workers and other factor owners, to firms, and therefore to the whole economy. The box “Trade Is Important” provides useful data about the types of products traded and the increasing role of trade in national economies.", "knowledgePoints": [ "Demand and Supply", "Two National Markets and the Opening of Trade", "Four Questions about Trade", "Demand Curve", "Demand Responsiveness", "Consumer Surplus" ], "cases": [ "Two national market graphs with no trade, one with a high ...", "The remainder of the chapter examines the use of supply and ...", "Chapter 2 has the first of five boxes about the global ...", "The same set of three graphs (the two national markets and ..." ] }, { "slug": "chapter-03-why-everybody-trades-comparative-advantage", "chapter": 3, "title": "Why Everybody Trades: Comparative Advantage", "overview": "Why Everybody Trades: Comparative Advantage This chapter extends the analysis of international trade to consider trade in a multiple-product economy. An economy composed of two products is useful to bring out insights about international trade. This general equilibrium approach explicitly shows the effects of resource reallocations between industries. The chapter culminates in showing the importance of comparative advantage for understanding why countries trade.", "knowledgePoints": [ "Adam Smith's Theory of Absolute Advantage", "Ricardo's Theory of Comparative Advantage", "Ricardos Constant Costs and the Production-Possibilities Curve", "Principle of Absolute Advantage", "Ricardo’s Theory of Trade", "The Ricardian Model" ], "cases": [ "10.If the number of labor hours to make a bushel of ...", "The story begins with Adam Smith and absolute advantage. (A box ...", "Smith's approach does not indicate what would happen if the same ...", "2.Agree. Imports permit the country to consume more (or do more ..." ] }, { "slug": "chapter-04-trade-factor-availability-and-factor-proportions", "chapter": 4, "title": "Trade: Factor Availability and Factor Proportions Are Key", "overview": "Trade: Factor Availability and Factor Proportions Are Key This chapter continues the analysis of international trade in a two-product economy. It picks up from the end of Chapter 3, where it was noted that the assumption of constant marginal cost and the implication that countries will completely specialize in producing only one (or a few) product(s) are unrealistic. In the modern theory of international trade, we use the assumption of increasing marginal costs—as one industry expands at the expense of others, increasing amounts of other goods must be given up to obtain each extra unit of the expanding output.", "knowledgePoints": [ "Production with Increasing Marginal Costs", "Production and Consumption Together", "Trade Affects Production and Consumption", "The Heckscher-Ohlin Theory", "Four Fundamental Questions About Trade", "Production Possibilities under Increasing Costs", "What’s Behind the Bowed-Out Production- Possibility Curve?", "What’s Behind the Bowed-Out Production- Possibilities Curve?" ], "cases": [ "9.In Figure 4.4A, the shape of the U.S. production-possibility curve ske ...", "Putting the production possibility curve together with the community ind ...", "The graph can be used to show that each country gains ...", "The skewness of production possibility curves can arise because resource ..." ] }, { "slug": "chapter-05-who-gains-and-who-loses-from-trade", "chapter": 5, "title": "Who Gains and Who Loses from Trade?", "overview": "Who Gains and Who Loses from Trade? This chapter has two major purposes. First, it examines the implications for factor incomes of trade that follows the Heckscher-Ohlin (H-O) theory. Second, it examines the empirical evidence on the Heckscher-Ohlin theory and some of its implications. The implications of H-O trade for factor incomes follow from the pressures for changes in production levels as a country shifts from no trade to free trade.", "knowledgePoints": [ "Who Gains and Who Loses within a Country", "Three Implications of the H-O Theory", "Does Heckscher-Ohlin Explain Actual Trade Patterns?", "Short-Run Effects of Opening Trade", "The Long-Run Factor-Price Response", "How Free Trade Affects Income Distribution in the Long Run", "The Stolper-Samuelson Theorem" ], "cases": [ "The chapter then shifts to examine empirical evidence on the Heckscher-O ...", "1. Mexico is abundant in unskilled labor and scarce in skilled ...", "According to the H-O approach and the Stolper-Samuelson theorem, the fac ...", "5. Leontief conducted his research shortly after World War II, when ..." ] }, { "slug": "chapter-06-scale-economies-imperfect-competition-and-trade", "chapter": 6, "title": "Scale Economies, Imperfect Competition, and Trade", "overview": "Scale Economies, Imperfect Competition, and Trade Standard trade theory presented in Chapters 3-5 is based on perfect competition, with constant returns to scale at the level of the individual firm and constant or increasing cost of expanding production at the level of the industry. Comparative advantage predicts that countries will trade with other countries that are different (the source of the comparative cost differences) and that each country will export some products and import other, quite different products.", "knowledgePoints": [ "Scale Economies", "Monopolistic Competition and Trade", "Intra-Industry Trade", "Economies of Scale", "Oligopoly and Trade" ], "cases": [ "b.With respect to short-run pressures on economic well-being, owners of ...", "b.From the perspective of the well-being of the United States or ...", "Our third theory is based on scale economies that are external ...", "Standard trade theory presented in Chapters 3-5 is based on perfect ..." ] }, { "slug": "chapter-07-growth-and-trade", "chapter": 7, "title": "Growth and Trade", "overview": "This chapter has two major purposes. First, it shows how the Heckscher-Ohlin model can be used to analyze economic growth and its impact on international trade. Second, it examines additional aspects of technological progress and its relationship to international trade. Growth in a country's production capabilities shifts the country's production-possibility curve out. Growth is balanced if the ppc shifts out proportionately.", "knowledgePoints": [ "Balanced Versus Biased Growth", "Growth in Only One Factor", "Changes in the Country's Willingness to Trade", "Effects on the Country's Terms of Trade", "Technology and Trade", "Balanced and Biased Growth", "Single-Factor Growth: The Rybczynski Theorem" ], "cases": [ "c.The U.S. willingness to trade increases. With growth of production and ...", "Finally, the box “Trade, Technology, and U.S. Wages” (another Focus on ...", "b.The U.S. willingness to trade probably decreases because the United St ...", "The growth of the country's production capabilities is likely to change ..." ] }, { "slug": "chapter-08-analysis-of-a-tariff", "chapter": 8, "title": "Analysis of a Tariff", "overview": "This chapter starts the analysis of government policies that limit imports, by examining the tariff—a government tax on imports. Early in the chapter, the first in a series of boxes on Global Governance introduces the World Trade Organization (WTO), created in 1995, which subsumed the General Agreement on Tariffs and Trade (GATT), formed in 1947. The major principles of the WTO include trade liberalization, nondiscrimination, and no unfair encouragement of exports.", "knowledgePoints": [ "A Preview of Conclusions", "The Effect of a Tariff on Domestic Consumers", "The Effects of a Tariff on Domestic Producers", "The Net National Loss from a Tariff", "The Tariff as Government Revenue", "The Terms-of-Trade Effect and a Nationally Optimal Tariff", "The Effect of a Tariff on Domestic Producers" ], "cases": [ "Early in the chapter, the first in a series of boxes ...", "In addition to beginning the examination of the role and activities ...", "We present the analysis of a tariff in this chapter for ...", "They Tax Exports, Too: There are a number of possible reasons ..." ] }, { "slug": "chapter-09-nontariff-barriers-to-imports", "chapter": 9, "title": "Nontariff Barriers to Imports", "overview": "This chapter has four major purposes: Present analysis of an import quota and a voluntary export restraint (VER), for both a small importing country and a large one. Provide an overview of other nontariff barriers (NTBs) to imports. Explore the relative sizes of the economic costs of tariffs and nontariff barriers. Continue the discussion of the World Trade Organization (WTO), including its role in liberalizing NTBs and its role in the settlement of international trade disputes.", "knowledgePoints": [ "The Import Quota", "Types of Nontariff Barriers to Imports", "Voluntary Export Restraints", "How Big Are the Costs of Protection?", "International Trade Disputes", "Protecting Domestic Producers against Import Competition", "The Effects of a Quota", "Area" ], "cases": [ "The final section of the chapter examines international trade disputes a ...", "VERs: Two Examples: In 1981 the U.S. government forced the Japanese ...", "The VER is usually not voluntary, but it is an export ...", "This chapter has four major purposes: Present analysis of an import ..." ] }, { "slug": "chapter-10-arguments-for-and-against-protection", "chapter": 10, "title": "Arguments for and against Protection", "overview": "Arguments for and against Protection This chapter has three purposes: To present a framework and a rule for evaluating arguments offered in favor of limiting imports, to apply the framework and rule to several prominent arguments for protection, and to examine the political processes that result in government policies toward imports. The framework allows us to look at situations in which the free market may not result in economic efficiency, because of distortions that result from market failures or from efficiency-reducing government policies.", "knowledgePoints": [ "The Ideal World of First Best", "The Realistic World of Second Best", "Promoting Domestic Production or Employment", "The Infant Industry Argument", "The Dying Industry Argument and Adjustment Assistance", "The Developing Government (Public Revenue) Argument", "The Politics of Protection", "Government Policies toward Externalities" ], "cases": [ "Role playing can be used to bring the issues raised in ...", "The chapter then examines several arguments in favor of protection that ...", "Another argument in favor of protection is assistance to industries that ...", "How Sweet It Is (or Isn’t): For a U.S. company that ..." ] }, { "slug": "chapter-11-pushing-exports", "chapter": 11, "title": "Pushing Exports", "overview": "Chapters 8 through 10 focused on government policies toward imports, with little attention to government policies and business practices in the exporting countries. This chapter shifts to looking at various practices and policies that can increase exports, as well as the effects of these export-promoting activities on importing countries. The chapter has two major purposes: Examine dumping—what it is, why it occurs, how it affects importing countries, and what government policies are used in importing countries.", "knowledgePoints": [ "Dumping", "Proposals for Reform", "Export Subsidies", "Should the Importing Country Impose Countervailing Duties?", "WTO Rules on Subsidies" ], "cases": [ "The economics of an export subsidy are rather different if the ...", "Agriculture is Amazing: A high tariff or a zero quota can ...", "The United States would lose. The U.S. government pays a subsidy ...", "Antidumping in Action: American steel firms reacted to increasing steel ..." ] }, { "slug": "chapter-12-trade-blocs-and-trade-blocks", "chapter": 12, "title": "Trade Blocs and Trade Blocks", "overview": "This chapter examines two types of trade barriers that are intended to discriminate between foreign countries. A trade bloc has lower or no barriers for trade between its members, while they maintain higher barriers for trade with outside countries. A trade embargo or trade block places extra barriers against trade with a specific foreign country, usually because of a broader policy disagreement. There are four major types of trade or economic blocs: free-trade area, customs union, common market, and economic union.", "knowledgePoints": [ "Types of Economic Blocs", "Is Trade Discrimination Good or Bad?", "The Basic Theory of Trade Blocs: Trade Creation and Trade Diversion", "Other Possible Gains from a Trade Bloc", "The EU Experience", "North America Becomes a Bloc", "Trade Embargoes", "Trade Barriers Designed to Discriminate" ], "cases": [ "For the European Union, most estimates are that the EU gains ...", "The North American Free Trade Area (NAFTA) began in 1994, subsuming ...", "6.The standard estimates are that Mexico has probably gained from NAFTA ...", "NAFTA has resulted in substantial increases in trade among the three ..." ] }, { "slug": "chapter-13-trade-and-the-environment", "chapter": 13, "title": "Trade and the Environment", "overview": "We begin the chapter with two provocative questions. First, is free trade anti-environment? We argue that it is not. There is no reason to think that trade generally promotes production or consumption of products that cause large harm to the environment. Surprisingly, the incentive to relocate production into “pollution havens” is usually small. Trade tends to raise world production and incomes. While some environmental problems become worse as production and income rise, others become less severe, in part because protecting the environment is a normal good.", "knowledgePoints": [ "Is Free Trade Anti-Environment?", "Is the WTO Anti-Environment?", "The Specificity Rule Again", "A Review of Policy Prescriptions", "Global Environmental Challenges", "Trade and Domestic Pollution", "The Size and Income Effects", "Environmental Problems by Income Level" ], "cases": [ "The material of this chapter lends itself to additional examples. The ...", "The analysis of transborder pollution raises new issues. We use the ...", "In our formal analysis we begin with the case in which ...", "Actual global negotiations to reach agreements to reduce greenhouse gas ..." ] }, { "slug": "chapter-14-trade-policies-for-developing-countries", "chapter": 14, "title": "Trade Policies for Developing Countries", "overview": "Trade Policies for Developing Countries This chapter examines trade issues affecting developing countries. It begins by noting differences between high-income developed or industrialized countries and low- and medium-income developing countries, as well as differences among the developing countries. Some developing countries are growing quickly, while others are stagnating or declining. The comparative advantages of developing countries (relative to industrialized countries) derive from abundance of unskilled labor and, for many, abundance of natural resources, as well as a tropical climate for agriculture.", "knowledgePoints": [ "Which Trade Policy for Developing Countries?", "Are the Long-Run Price Trends Against Primary Producers?", "International Cartels to Raise Primary-Product Prices", "Import-Substituting Industrialization (ISI)", "Trade Policy Alternatives for a Developing Country", "Challenges Faced by Developing Countries", "The Relative Price of Primary Products, 1900-2017", "Classic Monopoly as an Extreme Model for Cartels" ], "cases": [ "Special Challenges of Transition: The international economics of the sit ...", "One possible approach to the problem of declining primary product prices ...", "Import-substituting industrialization (ISI) was the dominant policy in t ...", "8.The prediction is that the shift to an outward oriented policy ..." ] }, { "slug": "chapter-15-multinationals-and-migration-international-facto", "chapter": 15, "title": "Multinationals and Migration: International Factor Movements", "overview": "Multinationals and Migration: International Factor Movements This chapter provides a survey of the economics of foreign direct investment (FDI) and the economics of labor migration. Foreign direct investment is a flow of funding provided by an investor (usually a firm) to establish or acquire a foreign company or to finance an existing foreign company that the investor owns. Ownership is important because the investor has or acquires the power to have a substantial influence on the management of the foreign company.", "knowledgePoints": [ "Foreign Direct Investment", "Multinational Enterprises", "FDI: History and Current Patterns", "MNEs and International Trade", "Should the Host Country Restrict FDI Inflows?", "Migration" ], "cases": [ "The latter part of the chapter examines international migration, includi ...", "10.Agree or disagree, depending on whether you think the import-reducing ...", "11.First, in 1924, the United States passed a law that severely ...", "The analysis has implications for the policies used by receiving countri ..." ] }, { "slug": "chapter-16-payments-among-nations", "chapter": 16, "title": "Payments among Nations", "overview": "This chapter begins the discussion of international finance and macroeconomics—the subject of the rest of the book. Its major purpose is to show how the balance of payments accounts for international transactions and how the different balances (or sub-balances) can be interpreted. It also presents the international investment position. A country's balance of payments records all economic transactions between the residents of the country and residents of the rest of the world.", "knowledgePoints": [ "A Country's Balance of Payments", "The Macro Meaning of the Current Account Balance", "The Macro Meaning of the Overall Balance", "The International Investment Position", "Accounting Principles", "Financial Account" ], "cases": [ "The current account balance (CA) has several meanings. First, CA equals ...", "A good source of up-to-date information on many countries is Balance ...", "5.Transaction c contributes to a surplus in the current account because ...", "10. a.The current account balance is exports of goods and services ..." ] }, { "slug": "chapter-17-the-foreign-exchange-market", "chapter": 17, "title": "The Foreign Exchange Market", "overview": "The purpose of this chapter is to present the foreign exchange market and exchange rates, with an emphasis on spot exchange rates. Foreign exchange is the act of trading different countries' moneys. An exchange rate is the price of one money in terms of another. The spot exchange rate is the price for \"immediate\" exchange. The forward exchange rate is the price agreed to today for exchanges that will take place in the future.", "knowledgePoints": [ "The Basics of Currency Trading", "Demand and Supply for Foreign Exchange", "Arbitrage Within the Spot Exchange Market", "Using the Foreign Exchange Market", "Interbank Foreign Exchange Trading", "Floating Exchange Rates", "Fixed Exchange Rates" ], "cases": [ "4.The U.S. firm obtains a quotation from its bank on the ...", "The text explains the downward slope of the demand curve for ...", "Suggested answers to case study discussion question Foreign Exchange Tra ...", "b.Demand for yen. The U.S. import company probably begins with dollars ..." ] }, { "slug": "chapter-18-forward-exchange-and-international-financial-inv", "chapter": 18, "title": "Forward Exchange and International Financial Investment", "overview": "Forward Exchange and International Financial Investment This chapter presents the uses of forward foreign exchange rates and the returns and risks of international financial investments, both covered and uncovered. It begins by noting that in many situations people or organizations are exposed to exchange rate risk, because the value of the individual's income, wealth, or net worth changes when exchange rates change unexpectedly in the future.", "knowledgePoints": [ "Exchange Rate Risk", "International Financial Investment", "International Investment With Cover", "International Investment Without Cover", "Does Interest Parity Really Hold? Empirical Evidence", "The Market Basics of Forward Foreign Exchange", "Hedging Using Foreign Exchange" ], "cases": [ "Eurocurrencies: Not (Just) Euros and Not Regulated: The beginning and ea ...", "The final section of the chapter presents some evidence on whether ...", "11. a.For the expected future value of the euro, the future ...", "A forward foreign exchange contract is an agreement to exchange a ..." ] }, { "slug": "chapter-19-what-determines-exchange-rates", "chapter": 19, "title": "What Determines Exchange Rates?", "overview": "What Determines Exchange Rates? Since the general shift to floating exchange rates in the early 1970s, exchange rates between the U.S. dollar and other major currencies have been variable or volatile. The charts at the beginning of the chapter suggest three types of variability. First, there are long-term trends in which some currencies tend to appreciate against the dollar, and others tend to depreciate. Second, there are medium-term trends which are sometimes counter to the longer trends.", "knowledgePoints": [ "A Road Map", "Exchange Rates in the Short Run", "The Long Run: The Monetary Approach", "The Long Run: Purchasing Power Parity (PPP)", "Exchange-Rate Overshooting", "How Well Can We Predict Exchange Rates?", "Introduction", "Asset Market Approach to Exchange Rates" ], "cases": [ "2.Calculate and report the real bilateral exchange rate values (annual a ...", "Price Gaps and International Income Comparisons: The list of countries i ...", "11. a.If we use 1995 as the base year, the nominal ...", "b.For the United States, the quantity theory of money with a ..." ] }, { "slug": "chapter-20-government-policies-toward-the-foreign-exchange", "chapter": 20, "title": "Government Policies toward the Foreign Exchange Market", "overview": "Government Policies toward the Foreign Exchange Market The first half of this chapter examines types of government policies toward the foreign exchange market and provides analysis of government intervention and exchange controls. The second half examines the actual policies that governments have adopted during the past 150 years. Government policies toward the foreign exchange market exist for a variety of reasons, including to reduce variability in exchange rates, to keep the exchange value of its currency either high or low, or to raise national pride in a steady or strong currency.", "knowledgePoints": [ "Two Aspects: Rate Flexibility and Restrictions on Use", "Floating Exchange Rate", "Fixed Exchange Rate", "Defense Through Official Intervention", "Exchange Controls", "International Currency Experience", "What to Fix To?", "When to Change the Fixed Rate?" ], "cases": [ "A compromise between the United States and Britain led to an ...", "The U.S. government probably could have maintained the system, at least ...", "The current system is often described as a system of managed ...", "The actual current system is in many ways a nonsystem—countries can ..." ] }, { "slug": "chapter-21-international-lending-and-financial-crises", "chapter": 21, "title": "International Lending and Financial Crises", "overview": "International Lending and Financial Crises International capital movements can bring major gains both to the lending or investing countries and to the borrowing countries, through intertemporal trade and through portfolio diversification for the lenders/investors. But international lending and borrowing sometimes is not well-behaved—financial crises are recurrent. This chapter examines both the gains from well-behaved lending and borrowing and what we know about international financial crises.", "knowledgePoints": [ "Gains and Losses from Well-Behaved International Lending", "International Lending to Developing Countries", "Reducing the Frequency of Financial Crises", "Financial Crises: What Can and Does Go Wrong", "Resolving Financial Crises", "International Lending Benefits", "Taxes on International Lending" ], "cases": [ "Crisis struck in 1982, when first Mexico and then many other ...", "Argentina pegged its peso to the U.S. dollar and succeeded in ...", "Financial crises also hit industrialized countries, and the chapter conc ...", "The first explanation is overlending and overborrowing. This can occur w ..." ] }, { "slug": "chapter-22-how-does-the-open-macroeconomy-work", "chapter": 22, "title": "How Does the Open Macroeconomy Work?", "overview": "How Does the Open Macroeconomy Work? This chapter provides a framework and model for analyzing international macroeconomics. We judge the performance of a national economy against two objectives. Internal balance involves both full employment and price stability or an acceptable rate of inflation. External balance involves a reasonable and sustainable makeup of the country's international payments, taken to be approximately an official settlements balance that is zero.", "knowledgePoints": [ "The Performance of a National Economy", "Domestic Production Depends on Aggregate Demand", "Equilibrium GDP and Spending Multipliers", "Trade Depends on Income", "A More Complete Framework: Three Markets", "A Framework for Macroeconomic Analysis", "Domestic Production and Unemployment" ], "cases": [ "2.Disagree. The recession in the United States reduces U.S. national inc ...", "11.The real exchange rate value of the dollar increased from 90 ...", "We have chosen to focus more on the complete model, and ...", "The final piece of the framework that we develop in the ..." ] }, { "slug": "chapter-23-internal-and-external-balance-with-fixed-exchang", "chapter": 23, "title": "Internal and External Balance with Fixed Exchange Rates", "overview": "Internal and External Balance with Fixed Exchange Rates This chapter presents the analysis of the macroeconomy of a country that has a fixed exchange rate. As noted in the introduction, this analysis is important because some countries currently have fixed exchange rates or floating rates that are so heavily managed that they resemble fixed rates, and because there are ongoing discussions of proposals to return to a system of fixed rates among the world's major currencies.", "knowledgePoints": [ "From the Balance of Payments to the Money Supply", "From Money Supply Back to the Balance of Payments", "Sterilization", "Monetary Policy with Fixed Exchange Rates", "Fiscal Policy with Fixed Exchange Rates", "Perfect Capital Mobility", "Shocks to the Economy", "Imbalances and Policy Responses" ], "cases": [ "c.The rightward shift of the IS curve results in a new ...", "The effect of a large, abrupt change in the exchange rate ...", "A Tale of Three Countries: (a) If Germany had raised taxes ...", "This chapter presents the analysis of the macroeconomy of a country ..." ] }, { "slug": "chapter-24-floating-exchange-rates-and-internal-balance", "chapter": 24, "title": "Floating Exchange Rates and Internal Balance", "overview": "Floating Exchange Rates and Internal Balance This chapter presents the analysis of the macroeconomy of a country that has a floating exchange rate. If government officials allow the exchange rate to float cleanly, then the exchange rate changes to achieve external balance. With floating exchange rates monetary policy exerts strong influence on domestic product and income. A change in monetary policy results in a change in the country's interest rates.", "knowledgePoints": [ "Monetary Policy with Flexible Exchange Rates", "Fiscal Policy with Flexible Exchange Rates", "International Macroeconomic Policy Coordination", "Shocks to the Economy", "Internal Imbalance and Policy Responses", "International Microeconomic Policy Coordination", "Floating Exchange Rates" ], "cases": [ "This is what did happen. On March 18, the monetary authorities ...", "The box on “Why Are U.S. Trade Deficits So Big?” provides ...", "c.If the dollar depreciates, then the United States gains international ...", "Changes in government policies adopted by one country can have spillover ..." ] }, { "slug": "chapter-25-national-and-global-choices-floating-rates-and-t", "chapter": 25, "title": "National and Global Choices: Floating Rates and the Alternatives", "overview": "National and Global Choices: Floating Rates and the Alternatives This chapter provides a capstone to the discussion of international finance and international macroeconomics by examining the choice between fixed and floating exchange rates. Much of the discussion examines this choice from the point of view of a single country, but the discussion also examines some issues related to the functioning of the entire system.", "knowledgePoints": [ "Key Issues in the Choice of Exchange-Rate Policy", "National Choices", "Extreme Fixes", "The International Fix – Monetary Union", "Effects of Macroeconomic Shocks", "The Effectiveness of Government Policies", "Differences in Macroeconomic Goals, Priorities, and Policies" ], "cases": [ "The members of the European Union (EU) are pursuing an international ...", "Fiscal policy has become a flash point for the euro area. ...", "Key gains from European Monetary Union are the elimination of exchange ...", "Given the importance of having and maintaining similar inflation rates f ..." ] } ]