International Environment of business

claim that the quantity supplied of a good rises when the price of the good rises.

increase in supply

Point at which the supply and demand curve intersect

supplied quantity is bigger than quantity demanded(above equilibrium)

supplied quantity is smaller than demanded quantity(below equilibrium)

area below demand curve and above the price (amount that buyer is willing to pay - amount they actually paid)

amount that seller is paid for a good - seller's cost

producer that needs a smaller amount of intputs to produce a good

the producer with smaller opportunity cost of producing a good has a comparative advantage in producing that good

Restricting trade by applying tariffs, export subsidies, customs and entry procedures, quotas

limit how much can be imported of a good

tax on an imported good

- Increased viariety of goods, lower costs through econoies of scale, higer productivity through increased competition, echanced flow of know-how, "democratisation" through opening of markets

-increase in gap between the rich and the poor, exploitation of workers and growers, increase in pollution and waste of natural ressources, dominance of global trade by the rich, northern hemisphere countries, lack of opportunities for the poor to be able to have3 access to global markets

International trade. (at the end of the 19th century trade had reached remarkable levels due to colonialism, but dropped due to wars and isolationist policies. GATT was founded after WWll and WTO in 1995

-Administering WTO trade agreements

-forum for trade negotiations

-handling trade disputes,

-monitoring national trade policies

-technical assistance and training for d3eveloping countries

-cooperation with other international organizations

-Non-Discrimination

-Reciprocity (lower trade barriers through negotiations

-Binding and enforceable commitments

-Transperacy

-Safety values

-tarrifs on imported goods

-Import quotas

-Exports subsidies

-protect local jobs (no foreign competitors)

-encourage local production te replace imports

-protect infant industries

-reduce reliance on foreign suppliers

-encourage local investment and FDI

Appreciation: Increase in the exchange rate

Depreciation: decrease in the exchange rate

realer exchange rate=(nominal exchange rate x price of swiss goods in CHF) : Price of european goods in euros

1. stable exchange rate

2. capital mobility

3. Monetary policy autonomy

purchasing power parity --> measures the purchasing power of one currency against another after taking into account their exchange rates

that price differentials between countries are not sustainable in the long run as market forces will equalize prices between countries and change exchange rates in doing so

P*/P (price in euro/price in CHF)

-Ensure price stability

-ensure the supply of cash

-provide cashless payment transactions

-manage investment of international reserves

-ensure stability of the financial system

Valua of money directly linked to gold

-trade -productivity -inclusive growth -gender equality -debt management

Gross domestic product --> market valua of all final goods and services produced within a country in a given period of time

-Production approach (Production value - purchases + taxes - subsidies)

-expenditure approach (Y= C+I+G+NX)

-Income approach

-Best measurement of the ECONOMIC well-being of a society

-The data you need for GDP is available in many countries

-Higher GDP per capita = higher standard of living

Can't measure welfare, happiness and quality of life

Economic growth - price stability - ecological quality - full employment - foreigh trade equilibrium - social welfare

Nominal --> at current prices

Real --> at constant prices