Chapter 1. Global Economic Picture
I. Targets and Requirements
练习1~2 小时。III. Teaching Methods
questions and answers
Step 1 Introduction
Economic knowledge is essential &necessary for everybody, especially for those who want to make a wealth. Business terms usually used in economic field are foreign trade, multinational enterprises, GDP, exchange rate, trust fund, security etc. You can get all these information from various kinds of medias, TV, newspapers, radio and so on. So this course is useful for you to enlarge your knowledge of the china‟ economy as well as the world.
1.GDP---total value of goods produced and services provided by a country during a given period of time(usually a year).
A common equation for GDP is:
2.Export subsidies: payments given to domestic producers who sell goods abroad. Besides attempting to protect import-competing industries, many national governments grant subsidies to domestic producers, including special tax exemptions and the provision of capital at favored rates, in order to increase the volume of exports. Foreign consumers are favored over domestic consumers to the extent that the foreign price of a subsidized export is less than the product‟s domestic price. One type of export subsidy is the export credit subsidy.
3.Deflation: in economics, deflation is a decrease in the general price level, or a rise in the purchasing power of money with respect to a large class of goods of services. In modern economies, deflation is caused by a collapse in demand, and is associated with recession and long term economic depressions.
4.inflation: the general level of prices are increasing at a decreasing rate. Theoretically, the „general level of prices‟ is comprised of the price of
both wages and goods and services.
5.IMF: 1944,US.UK. and other 42 countries signed the Articles of Agreement of the International Monetary Fund at Bretons woods.
Bretton woods system—fixed exchange rates against the US dollar
and unvarying dollar price of gold
Functions: 1)lending facilities, provide loans to member states 2)adjustable parties
课本上所列Notes to the Text 以及Questions on Content and Language points
(for preview, discussion and review)也属重点讲解之列，但在这儿省略.
I new words
II text analysis
1. the world economic outlook
First, “review the past and then forecast the futures”, when we start to
explore the various specific aspects of international trade, we must learn some useful economic indicators like GDP, real and nominal GDP, personal consumption or consumer spending, investment of capital spending, consumer prices, industry output, unemployment rate, interest rate, exchange rate, mortgage rate, inflation rate, foreign trade, stock market index movements, etc;
Second, we will introduce the world economic growth in 2003.
In this text, we mainly focus on the discussion of the following 5 problems
1. weak demand
Relationship between Aggregate Demand and Aggregate Supply Factors influence the level of demand(domestic and outside) 2. currency clash ( weak dollar and stronger yuan)
3. trade tension (cross Atlantic)
4. deflation worries
5. the wounds inflicted by SARS (bird flu….)
conclusion: In order to solve these problems, countries have taken some measures. E.g. Cut taxes ; reduce interest rates, clean up financial system, counter deflation
讲解 Additional Models of Economic Outlook ！second half pickup，
Step 3. Exercises
Step4. Supplementary Reading for chapter 1. Poised for Growth 1. the framework of this text
P1. Is America‟s economy finally set to shake off its funk?
P2-4 take looser monetary policy to counter against deflation P5 Mr Bush‟s tax package (fiscal policy)
P6-7 the economy‟ growth
P8-10 whether any rebound will last
2. read the text and discussion
1) the overview of Dow Jones Industrial Average
The Dow Jones Industrial(DJIA), Transportation (DJTA) and Utilities(DJUA) Averages are maintained and reviewed by editors of The Wall Street Journal. For the sake of continuity, composition changes are rare, generally occur only after corporate acquisitions or other dramatic shifts in a component‟s core business. While there are
no rules for component selection, a stock typically is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector covered by the average. The index serves as a measure of the entire U.S market, covering such diverse industries as financial services, technology, retail, entertainment and consumer goods. Today stocks are routinely considered as investment vehicles, even by conservative investors.
An acronym for National Association of Securities Dealers Automated Quotations, is a stock exchange run by the National Association of Securities Dealers. NASDAQ is made up of the NASDAQ National market and NASDAQ SmallCap Market. It was the world‟s first
electronic stock market(1971) and allows multiple market participants to trade through its electronic communications networks(ECNs) structure, increasing competition. The Small Order Execution System(SOES) is another NASDAQ feature, introduced in 1984, to ensure that in turbulent market conditions small market orders are not forgotten but are automatically processed.
3) central bank
is an autonomous entity responsible for the stability of the national currency and the national financial system as a whole. It implements the country‟s monetary policy. Other duties might include providing financial services to governments(eg, storing other countries‟ monetary
reserves) and supervising of banking institutions(eg. In the case of mergers and acquisition).
Central banks in different countries have arrange of influence over exchange rates. Typically a central bank seeks to impose centralized control over market prices such as the price of credit. This is called interest rate policy. Central banks influence interest rates through a policy lever called open market operations.
Chapter 2 American Economy
I. Targets and Requirements
III. Teaching Methods
questions and answers
Step 1. lead- in What do you know about the economy of the USA? Step 2. 重点讲解
Business cycle: refers to the somewhat simultaneous ups and downs in most parts of an economy. They tend to repeat at fairly regular time intervals. The cycle involves shifts over time between periods of relatively rapid growth of output( recovery and prosperity), alternating with periods of relative stagnation or decline( contraction or recession). These fluctuations are often measured using the gross domestic product. Since no two cycles are alike in their details, some economists dispute the existence of cycles and use the words “fluctuations” or similar instead.
Full employment: in economics, it has more than one meaning, it may means zero unemployment or underemployment, or no unemployment above the level of the “natural” rate of unemployment . frictional,
structural, classical, and Marxian unemployment.
?. New words
?. Text analysis
1. Discuss the image of the USA (economy, political, culture, education
2. The economic base and industrial structure
The economy of the USA is described as “mixed” while it is
organized primarily on a capitalist model( entrepreneurship is
encouraged, and most enterprises are privately owned). It also limits
free markets with social welfare programs like social security,
unemployment benefits and Medicare, as well as government
regulation in virtually every industry.
The U.S. economy is marked by a steady growth, low unemployment,
low inflation, large trade deficit and rapid advances in technology. Its
economy can be regarded as the most important in the world. Several
countries have coupled their currency with the dollar, or even use it as
a currency. The U. S. stock markets are globally seen as an indicator
of the world economy. The country has rich mineral resources, with
extensive gold, oil, coal and uranium deposits. Successful farm
industries rank the country among the top producers of corn, wheat,
sugar and tobacco. The manufacturing sector produces cars, airplanes
and electronics. The biggest industry now is service with about
three-quarters of U.S. residents employed in that sector.
According to this text, American economy is based on manufacturing
industry , rich natural resources and high technology
3. paragraph 1---3: lead-in part. The current US economy was
4. paragraph4—6: “blithe unconcern” attitude of Bush administration
5. paragraph7-9: the policy makers should talk about the economy and
may laid out three scenarios for future developments
Chapter 3 International trade theories
Targets and Requirements: 让学生了解古典国际贸易理论产生的背
Contents；1.Introduction the Mercantilism
2.Adam Smith and the Theory of Absolute Advantage
3.David Ricardo and the Theory of Comparative Advantage ?. “Mercantilism”
1.It was a system prevalent in :France Spain England Holland 2.Basic Assumptions of Mercantilism
A country‟s wealth is measured by its holdings of precious metals (gold,
International trade is a zero sum game
A country should maintain a positive trade balance (that is, export more than it imports)
?Absolution Advantage Theory
Adam Smith 1723-1790
explains: Nation A is more efficient in the production of X than Nation B, therefore has absolute advantage over Nation B. Whereas Nation B is more efficient in the production of Y, therefore has absolute advantage over Nation A. Therefore there will be trade X and Y between them.
An example of Absolute Advantage
Output per man-year of labor
Country A Country B
Wheat 50 10
Cotton 20 40
?Comparative Advantage Theory
3.In terms of Opportunity Cost
– Lower opportunity costs than other countries.
Differences in opportunity costs are the source of comparative advantage. A country has a comparative advantage in producing a good if the opportunity cost of producing that good in terms of other goods is lower in that country than it is in other countries.
Trade between two countries can benefit both countries if each country exports the goods in which it has a comparative advantage. Assumptions
Fixed national endowment and full employment
Common technology at firm level
No transportation costs
Factor mobile among industries and immobile among countries
2 countries X 1 factor X 2 products
An example of Comparative Ad.
Output per man-year of labor
Country A Country B
Wheat 50 10
Cotton 40 20
?Factor Proportion Theory
Also called the Heckscher-Ohlin Theory
Labor intensive, capital intensive
Assumptions: same technology incomplete production
The Heckscher-Ohlin model (H-O model) is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region.
Chapter 4 Trade Policy
Targets and Requirements；让学生了解自由贸易与贸易保护主义的产
Contents； 1.Free Trade :benefits definition
2.protectionism: definition arguments
?. Arguments against free trade
1. Infant Industry argument:
Certain industries in certain country are newly established. Like an infant yet to grow strong, they need protection.
Opposition: Too much protection spoils the child.
The infant industry argument
The infant industry argument is an economic reason for protectionism. The crux of the argument is that nascent industries often do not have the economies of scale that their older competitors from other countries may have, and thus need to be protected until they can attain similar economies of scale. It was first used by Alexander Hamilton in 1790 and later by Friedrich List, in 1841, to support protection for German manufacturing against British industry.
2. National defense Or strategic industry argument:
Some industries are strategic, like arms production. They must be