ABSTRACT
The field of international economics can be roughly categorized as concerned with either the real side or the finance side of international issues. The “real” side focuses on such basic questions as why trade occurs between countries, what determines the terms of trade, and how government policies such as tariffs do or quotas affect trade. The “finance” side makes explicit the fact that countries differ in currencies in order to focus on such questions as what determines exchange rates and how macroeconomic shocks in one country (e.g., a change in the supply of money) affect its economy and the economies of the countries with which it trades.
