Chapter 1
Introduction
◼ Chapter Organization
What Is International Economics About?
The Gains from Trade
The Pattern of Trade
◼ Chapter Overview
The intent of this chapter is to provide both an overview of the subject matter of international economics
and to provide a guide to the organization of the text. It is relatively easy for an instructor to motivate the
study of international trade and finance. The front pages of newspapers, the covers of magazines, and
the lead reports on television news broadcasts herald the interdependence of the U.S. economy with the
rest of the world. This interdependence may also be recognized by students through their purchases of
imports of all sorts of goods, their personal observations of the effects of dislocations due to international
competition, and their experience through travel abroad.
The study of the theory of international economics generates an understanding of many key events that
shape our domestic and international environment. In recent history, these events include the causes and
consequences of the large current account deficits of the United States; the dramatic appreciation of the
2 Krugman/Obstfeld/Melitz • International Economics: Theory & Policy, Tenth Edition
Chapter 1 of the text presents data demonstrating the growth in trade and the increasing importance of
international economics. This chapter also highlights and briefly discusses seven themes that arise