International Economic Theory

The Comparative Advantage Theory, proposed by David Ricardo, argues that countries should specialize in producing and exporting goods in which they have a lower opportunity cost, even if they have an absolute advantage in producing other goods.

Tariffs are taxes imposed on imported goods, primarily aimed at protecting domestic industries from foreign competition by increasing the price of imported goods and making them less attractive to consumers.

Mercantilism, a historical economic theory, emphasizes the importance of exports and a favorable balance of trade for economic growth and national wealth.

Exchange Rate is the rate at which one currency can be exchanged for another, determining the relative value of currencies and affecting international trade and investment.

International Trade refers to the exchange of goods and services between countries, involving the import and export of products and services.

Balance of Trade refers to the difference between a country's exports and imports, indicating whether a country has a trade surplus or deficit.

International Capital Flows refer to the movement of capital, such as investments and loans, across national borders, affecting exchange rates, economic growth, and global financial markets.

Dollarization refers to the process of a country adopting the U.S. dollar as its official currency, often done to stabilize the economy and reduce inflation.