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Trade and financial relations, The elements of the model, The main…
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The main elements of the international trade model are the measurement of GNP, the aggregate global demand for the concept of exports, net or balance of the trade balance.
Exports: correspond to goods and services that being produced in the country are sold abroad or to the rest of the world.
Imports: they correspond to the goods and services that being produced abroad or the rest of the world are bought and brought into our country to satisfy our needs.
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It is an argument in favor of free trade, made by David Ricardo. If country A produces a good at a lower cost than country B, it is in the latter's interest to buy it rather than produce it.
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Consequently, tariffs have a negative effect on the economy, since they deprive the consumer of cheap products and those who produce the cheapest good of benefits.
The law of comparative advantages considers this case and postulates that despite the fact that one country has an advantage in the production of goods over another, trade is always possible and that both obtain benefits.
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There are economies of scale in the production of a good when the average cost of the same two decreases, in the long run, as the scale in which it is produced increases. In the opposite case, when costs increase the scale of production, we speak of diseconomies of scale.
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Internal: they are those that occur within the interior of a firm as a product of the expansion of the production scale, such as those that arise from the indivisibility of certain equipment or technical procedures, which have a scale where efficiency is greater.
External: are those that occur when the integration of various firms, the costs of financing or obtaining raw materials fall, or when it is possible to make savings due to the sharing of certain technological processes that require the use of raw materials or similar technical procedures.
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Monopoly: it is a market structure characterized by the presence of a single company, which produces a homogeneous good and which behaves non-parametrically in prices and by the existence of barriers to entry and exit from the market.
Perfect competition: it is when there are many companies in the market for a good or service and in such a way that there is not one among them that has greater power to influence the market than the others.
Oligopoly: it is assumed that there are several companies, but in such a way that none of them can fully impose itself on the market.
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National accounting measures the activity of an economy throughout a year, recording the transactions carried out between the different types of agents that are part of said economy.
The product or national income: it is the total value of all final goods and services, generated in an economy in one year.
The measurement of the national product: the most direct method would be to locate all the companies that have produced something during the year. Calculate the value of what is produced and add the figures of all the companies.
The double dimension of the national product: we can calculate income in two different ways as a flow of products and services and as a flow of costs. The national product is obtained by adding the total annual consumer spending on final goods and services.
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International economic and financial relations are manifested, depending on their nature, in trade in goods and services (exports and imports).
In investments it is (direct and real estate) in loans and credits and in unilateral transfers (without counterparity).
The level of interdependence and international integration has been possible without any doubt, due to the efficiency achieved in the organized exchange of more currencies for others at a price (exchange rate), that is, due to the existence of an international monetary system and within this, due to the development achieved by the foreign exchange market.
The forex market is an unorganized OTC (over the counter) market. The operating agents are actually in the offices of the main commercial banks in the world, which communicate with each other by computer, through telephones, telex and other information channels.