INTERNATIONAL ECONOMICS 2 (E)
1. Understand the balance of payments (BOP) (definition; credit transaction, debit
transaction; double-entry bookkeeping; current account, capital account, financial
account, official reserve assets/transaction; trade deficit; BOP surplus and deficit,
the importance of the current account; policies/measures to reduce a current account
deficit or BOP deficit).
2. Understand the foreign exchange market (definition, functions, participants, and the
role and influence of central banks on the foreign exchange market).
3. Understand
exchange
rate
(definition,
appreciation/revaluation,
depreciation/devaluation, the effects of currency devaluation on exports, imports,
foreign direct investment (FDI), exchange rate systems (definition, types,
advantages, and disadvantages). In the current context, should the Vietnamese
government devaluate the Vietnamese dong (VND) to boost exports and attract FDI
flows into Vietnam?
4. Know what the spot rate, forward rate, cross -exchange rate, arbitrage, foreign
exchange risk, hedging, and speculation are. Which exchange rate system is
Vietnam currently operating? Do you think Vietnam should change the type of
exchange rate system, explain your answers.
5. Understand the purchasing-power parity theory (the absolute and relative PPP
theories, limitations of PPP)
6. Understand monetary approach under fixed exchange rates and flexible exchange
rates.
7. Understand the effect of a change in the exchange rate (devaluation/depreciation or
revaluation/appreciation) on the nation’s current account; explain why a
depreciation of the deficit nation’s currency increase rather than reduces the balance
of payment deficit when the foreign exchange market is unstable.
8. Examines the concept of internal and external balance with the Swan Diagram;
Understand how a nation can achieve internal and external balance with
expenditure-changing and expenditure switching policies (SWAN Diagram).
Explain why monetary policy is ineffective under a fixed exchange rate but effective
under a flexible exchange rate.
9. Understand the international monetary system (definition, classification,
characteristics). Explain how the gold standard operated and collapsed.
10. Describe how the postwar Bretton Woods System operates and why it collapsed;
Indicate the role of gold and the US dollar in each International Monetary System./.