What is International Economics about? The balance of payments Some countries run large trade surpluses For example, in 1998 both China and South Korea ran trade surpluses of about $40 billion each Is it good to run a trade surplus and bad to run a trade deficit? Exchange Rate Determination The role of changing(floating)exchange rates is at the center of international economics Copyright C 2003 Pearson Education, Inc Slide 1-6Copyright © 2003 Pearson Education, Inc. Slide 1-6 ▪ The Balance of Payments • Some countries run large trade surpluses. – For example, in 1998 both China and South Korea ran trade surpluses of about $40 billion each. • Is it good to run a trade surplus and bad to run a trade deficit? ▪ Exchange Rate Determination • The role of changing (floating)exchange rates is at the center of international economics. What is International Economics About?