Instructor Manual For

Instructor Manual For Applied Interna�onal Economics 4 th Edi�on By Charles Sawyer, Richard Sprinkle (All Chapters 100% Original Verified A +Grade) (Lecture Notes Only) 1 / 4

© 2015 W. Charles Sawyer and Richard L. Sprinkle Chapter 1 outline I.Introduction •increasing interdependence •1975–2005 – world trade increased by 350 percent •purpose of international economics II.The scope of international economics •microeconomics •macroeconomics •international economics •course outline oChapters 1–12 – microeconomics oChapters 13–20 – macroeconomics •keeping international economics in perspective, i.e., domestic economic activity also is important •importance of international economics othe world economy odifferences among countries ostandards of living ointernational trade in services III.The output of the world economy •the importance of the concept •world GDP = $44.7 trillion •an aside on the World Bank •Table 1.1 IV.Imports and exports of goods in the world economy •imports •exports •Table 1.2 •world exports and world GDP – Figure 1.1 •US states and regions in the world economy V.International trade in services •issues oinvisible trade omeasurement problems oa new area of study orelative size – $2.4 trillion •Table 1.3 •The US position in the world economy – Figure 1.2 VI.Capital flows in the world economy •multinational corporations (MNCs) •portfolio capital •foreign direct investment (FDI) 2 / 4

© 2015 W. Charles Sawyer and Richard L. Sprinkle • Table 1.4 • foreign exchange market • the exchange rate • Figure 1.3

VII. Trends in international production and trade • Table 1.5

• The growth of the world economy: Historical perspectives and future trends

VIII. Globalization • definition • a country perspective – Table 1.6 • a world perspective – Figure 1.4 • analyzing globalization

• costs
• benefits

Teaching notes and tips

• Introduction

Notes The introduction begins by emphasizing the interdependence of the economies of the world.The second part is a listing of the topics covered in the chapter.

Teaching tip Introduce the concept of autarky by asking the students what their lives would be like if the US did not interact with any other economies.

II. The scope of international economics

Notes This section shows students how to relate the new course to the courses they have already taken. The emphasis is on reviewing the concepts of microeconomics and macroeconomics and explaining how they relate to international economics.

Teaching tip Emphasize the example in the text on how economics is conceptually like medicine.International economics is one of the major branches of economics that uses concepts developed in other parts of the discipline. In this sense, it is analogous to a major branch of medicine like internal medicine.

III. The output of the world economy

Notes This section provides the basic data on the size of the world economy. It also provides information on population and GDP per capita for low-, middle-, and high-income economies. Finally, GDP and population are shown for the various types of economies as percentages of world totals. 3 / 4

© 2015 W. Charles Sawyer and Richard L. Sprinkle

Teaching tip This is a good place to talk about the relationship between international economics and economic development. The drastic differences in income levels in the world economy are clearly shown in the second column of Table 1.1. This is also a good place to interject the material on US states and regions in the world economy.

IV. Imports and exports in the world economy

Notes This starts with how trade fits in with the other components of GDP. The data on world trade in goods for the three different types of economies are given in Table 1.2. Also, refer to Figure 1.1 to show that international trade is becoming an increasingly important part of the world economy.

Teaching tip Ask the students to calculate the ratio of trade to total output and then ask them if their curriculum comes anywhere near that ratio in terms of “international” content. You’ve just explained why they need to take this course.

• International trade in services

Notes The section starts with what international trade in services is and moves to why it is an understudied part of international economics. Table 1.3 provides information on international trade in services. This is an appropriate place to cover the position of the US in the world economy.

Teaching tip Emphasize that international trade in services is growing faster than international trade in goods so that over time the former is getting more important relative to the latter. Also, mention that many of the students will be working in the service sector and their careers are likely to be influenced by this type of trade.

VI. Capital flows in the world economy

Notes This section begins by defining movements of portfolio capital and FDI and relating the concepts to the activities of MNCs. Table 1.4 provides information on the relative size of these flows.

Teaching tip Emphasize that the size of these flows is so large that it is little wonder that the exchange rate is a closely watched figure.

VII. Trends in international production and trade

Notes The purpose of this section is to show the growth rates of output, trade, and population for the different types of economies. Notice from Table 1.5 that even as output growth has slowed in

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