1 International Economics Is Different 1
2 The Basic Theory Using Demand and Supply 13
3 Why Everybody Trades: Comparative Advantage 31
4 Trade: Factor Availability and Factor Proportions Are Key 47
5 Who Gains and Who Loses from Trade? 66
6 Scale Economies, Imperfect Competition, and Trade 88
7 Growth and Trade 117
8 Analysis of a Tariff 137
9 Nontariff Barriers to Imports 160
10 Arguments for and against Protection 192
11 Pushing Exports 222
12 Trade Blocs and Trade Blocks 252
13 Trade and the Environment 275
14 Trade Policies for Developing Countries 309
15 Multinationals and Migration: International Factor Movements 334
16 Payments among Nations 370
17 The Foreign Exchange Market 389
18 Forward Exchange and International Financial Investment 405
19 What Determines Exchange Rates? 433
20 Government Policies toward the Foreign Exchange Market 464
21 International Lending and Financial Crises 502
22 How Does the Open Macroeconomy Work? 539
23 Internal and External Balance with Fixed Exchange Rates 565
24 Floating Exchange Rates and Internal Balance 603
25 National and Global Choices: Floating Rates and the
Alternatives 628

APPENDIXES
A The Web and the Library: International Numbers and Other Information 655
B Deriving Production-Possibility Curves 659
C Offer Curves 664
D The Nationally Optimal Tariff 667
E Accounting for International Payments 673
F Many Parities at Once 677
G Aggregate Demand and Aggregate Supply in the Open Economy 680
H Devaluation and the Current Account Balance 690

SUGGESTED ANSWERS TO ODD-NUMBERED QUESTIONS AND PROBLEMS 694