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Study of economic interactions between two or more countries is referred to as International economics. Nowadays global reach is necessary for all the countries as no country can survive in isolation. They need to get linked with several other countries through political or economic ties. This subject scope is on the inter-linkages in terms of international finance, international trade, and international monetary economics. This includes study of the flow of goods and services, flow of capital and the flow of money across international borders.
International trade is a particular field in international economics that applies various microeconomic models to understand the international economy. It includes the same tools that are introduced and used in microeconomics courses, like supply and demand analysis, perfectly competitive, firm and consumer behavior, oligopolistic and monopolistic market structures, and the effects of market distortions. The typical course explains economic relationships between firms, consumers, factor owners, and the government.
Benefits of International Trade
1. It results in increased efficiency and also allows countries to participate in a global economy.
2. It encourages the opportunity of foreign direct investment (FDI), which refers to the amount of money that individuals invest into foreign companies and other related assets.
3. International trade helps in economies to grow more efficiently.
4. International trade also helps in raising employment level of the country and leads to a growth in the gross domestic product.
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