Let us begin with a quick review of how macroeconomics describes the way people and institutions view the world around them. Macroeconomics describes the broad idea that all economic activity is directed towards realizing the common good. It also describes how private economic actors make choices about how they will allocate their resources in the pursuit of those goals. In the US, the allocation of resources is made by the private sector using the power of money markets and guided by the central bank. Central banks in other countries make decisions about national debt, interest rates, and other macroeconomic instruments to stabilize an economy when it is facing a financial crisis.
International macro theory takes these concepts and describes how they influence the behavior of the foreign exchange market. You will take my international macroeconomics policy theory quiz to learn how these concepts affect the trading actions of both domestic and foreign investors. You will also learn how these same considerations influence the decisions of businesses and governments as they interact with one another. These actions produce large-scale changes in the international economy, which in turn have important consequences for the United States and the rest of the world.
One of the main theories that you will study when you take my international macroeconomics policy theory quiz is Say’s Law. According to Say’s Law, the value of a foreign currency is always equal to the value of that country’s currency in terms of the monetary supply. For example, the Japanese yen has strengthened versus the dollar in recent times as the Japanese government took steps to reduce the amount of foreign currency that it was buying in the financial markets. When the value of the Japanese currency was determined to be greater than that of the dollar on a constant basis, this was considered a sign that the Japanese government had purchased enough foreign currency to take its share of global trade. This theory can explain why some foreign countries trade with the dollar while others trade with the Japanese currency.
Another important macro theory that you will study when you take my foreign exchange policy course is the Phillips Curve. The Phillips Curve shows the relationship between changes in economic variables and changes in interest rates. The theory goes like this that if there is a sudden and substantial change in the rate of interest, it will tend to alter the amount of spending by the public. If there is a rapid increase in the rate of interest, consumers will become concerned about their balance sheets and will postpone purchases or use their savings to purchase other items.
Finally, you will learn about the theories of international trade. Some people believe that international trade is very difficult to understand because the term “commerce” seems to imply the process of doing business on an international scale. However, international trade is a very real and vital aspect of the global economy. Indeed, the volume of international trade is the single largest driver of the U.S. economy. Understanding this is essential to understanding macro policymaking in the United States.
As you can see, studying international macro economics can be a difficult and interesting subject to learn. And it is not just about economics. You will find that you begin to think about international politics, because the principles of macro are also related to international politics. Indeed, when you take my international macro policies course you will study such topics as political economy, decision theory and the political process. It is important to remember that these are all just the surface elements of macro.
I hope that you will find studying international macro economics interesting. I know that it will add some depth to your knowledge of world affairs and world economics. In particular, knowing a little bit about how different factors affect the macro economy will help you make better decisions as you work in your career. This is why it is essential to take my international macro policy evidence quiz for me.